A firm's balance sheet as of December 31 is shown below. The firm's sales for the year were $1,000,000,000, and its after-tax margin on sales was 5%. Sales are expected to increase next year to $1,300,000,000, and it plans to distribute 50% of its net profits to stockholders. Based on the percentage-of-sales method, the amount of funds that must be obtained externally by borrowing or by selling new stock is (M)

Assets ($ millions) Liabilities ($ millions)

Cash $ 50 Accounts payable $ 30

Receivables 130 Accrued taxes & wages 40

Inventories 150 Mortgage bonds 130

Net fixed assets 220 Common stock 150

Retained earnings 200

Choices:

$65 million

$144 million

$165 million

$111.50 million