$6-13$ ADDITIONAL FUNDS NEEDED Morrissey Technologies Inc.$\text{'}$s $2021$ financial

statements are shown here.

Morrissey Technologies Inc.: Income Statement for December $31,2021$

Sales

Operating costs including depreciation

EBIT

Interest

EBT

Taxes $(25\%)$

Net income

Per share data:

Common stock price

Earnings per share $($EPS$)$

Dividends per share $($DPS$)$

$$3,600,000$

$\frac{3,279,720}{\text{\$}320,280}$

$20,280$

$300,000$

$ $\frac{75,000}{225,000}$

$$225,000$

$$45\mathrm{.}00$

$$2\mathrm{.}25$

S $1\mathrm{.}35$

Suppose that in $2022,$ sales increase by $10\%$ over $2021$ sales. The firm currently has

$100,000$ shares outstanding. It expects to maintain its $2021$ dividend payout ratio and

believes that its assets should grow at the same rate as sales. The firm has no excess

capacity. However, the firm would like to reduce its operating costs$/$sales ratio to $87\mathrm{.}5\%$

and increase its total liabilities$-$to$-$assets ratio to $30\%.($It believes its liabilities$-$to$-$assets

ratio currently is too low relative to the industry average.$)$ The firm will raise $30\%$ of the

$2022$ forecasted interest$-$bearing debt as notes payable, and it will issue long$-$term bonds

for the remainder. The firm forecasts that its before$-$tax cost of debt $($which includes both

short$-$ and long$-$term debt$)$ is $12\mathrm{.}5\%.$ Assume that any common stock issuances or

repurchases can be made at the firm's current stock price of $$45.$

a$.$ Construct the forecasted financial statements assuming that these changes are made.

What are the firm's forecasted notes payable and long$-$term debt balances? What is

the forecasted addition to retained earnings?$6-13$ ADDITIONAL FUNDS NEEDED Morrissey Technologies Inc.$\text{'}$s $2021$ financial

statements are shown here.

Morrissey Technologies Inc.: Income Statement for December $31,2021$

Sales

Operating costs including depreciation

EBIT

Interest

EBT

Taxes $(25\%)$

Net income

Per share data:

Common stock price

Earnings per share $($EPS$)$

Dividends per share $($DPS$)$

$$3,600,000$

$\frac{3,279,720}{\text{\$}320,280}$

$20,280$

$300,000$

$ $\frac{75,000}{225,000}$

$$225,000$

$$45\mathrm{.}00$

$$2\mathrm{.}25$

S $1\mathrm{.}35$

Suppose that in $2022,$ sales increase by $10\%$ over $2021$ sales. The firm currently has

$100,000$ shares outstanding. It expects to maintain its $2021$ dividend payout ratio and

believes that its assets should grow at the same rate as sales. The firm has no excess

capacity. However, the firm would like to reduce its operating costs$/$sales ratio to $87\mathrm{.}5\%$

and increase its total liabilities$-$to$-$assets ratio to $30\%.($It believes its liabilities$-$to$-$assets

ratio currently is too low relative to the industry average.$)$ The firm will raise $30\%$ of the

$2022$ forecasted interest$-$bearing debt as notes payable, and it will issue long$-$term bonds

for the remainder. The firm forecasts that its before$-$tax cost of debt $($which includes both

short$-$ and long$-$term debt$)$ is $12\mathrm{.}5\%.$ Assume that any common stock issuances or

repurchases can be made at the firm's current stock price of $$45.$

a$.$ Construct the forecasted financial statements assuming that these changes are made.

What are the firm's forecasted notes payable and long$-$term debt balances? What is

the forecasted addition to retained earnings?