3 Harvard Prep Shops, a national clothing chain, had sales of $300 million last year. The business has a steady net profit margin of 20 percent and a dividend payout ratio of 25 percent. The balance sheet for the end of last year is shown below. bits Assets Cash Account receivable Inventory Balance Sheet December 31, 20xx (5 millions) Liabilities and Shareholders' Equity $10 Accounts payable 40 Accrued expenses 67 Other payables Connon stock 15e Retained earnings 5267 Total liabilities and equity $12 10 11 30 204 Plant and equipment block Total assets $267 Print Harvard's anticipates a large increase in the demand for tweed sport coats and deck shoes. A sales increase of 20 percent is forecast References All balance sheet items are expected to maintain the same percent of sales relationships as last year, except for common stock and retained earnings. No change in the number of common shares outstanding is scheduled, and retained earnings will change as dictated by the profits and dividend policy of the firm. a. Will external financing be required for the Prep Shop during the coming year? O Yes O NO b. What would the need for external financing be if the net profit margin went up to 25 percent and the dividend payout ratio was Increased to 60 percent? (Enter the answer in millions. Round the final answer to 2 decimal places.) Required new funds s million