A firm's financial statements for the current year are as follows (in millions of dollars).

Balance Sheet

Assets Liabilities and Equity

Cash $0.5 Accounts Payable $0.4

Accounts Receivable 0.7 Accrued Liabilities 0.2

Inventory 0.4 Notes Payable 0.3

Current Assets 1.6 Current Liabilities 0.9

Net Fixed Assets 2.5 Long-term Debt 1.7

Common Equity 1.5

Total 4.1 Total 4.1

Income Statement:

Sales $ 10.0

Cost of Goods Sold 6.6

Gross Profit 3.4

Operating Expenses 2.1

Net Operating Income 1.3

Interest Expenses 0.3

Earnings before Taxes 1.0

Income Taxes 0.4

Net Income 0.6

The management believes that sales will increase by 20 percent next year. The dividend payout ratio (Dividends / Net income) is targeted at 40 percent. The firm is operating at its full capacity, and therefore it will have to increase its fixed asset accordingly.

What is the additional funding requirement for the next year?

In the above question, what if the company has a more than enough capacity?

How much external fund will be required if the company does not have to increase its fixed asset?