ADDITIONAL FUNDS NEEDED Morrissey Technologies Inc.'s 2016 financial statements are shown here Morrissey Technologies Inc.: Balance Sheet as of December 31, 2016 Cash Accounts payable Notes payable Accrued liabilities $180,000 360,000 720,000 $360,000 56,000 180,000 $1,260,000 Total current liabilities $596,000 100,000 1,800,000 204,000 $2,700,000 Total current assets Long-term debt Common stock Retained earnings Fixed assets 1,440,000 2,700,000 Total liabilities and Total assets equity for December 31, 2016 Morrissey Technologies Inc.: Income Statement $3,600,000 3,279,720 Operating costs including $320,280 20,280 300,000 120,000 180,000 EBIT Interest EBT Taxes (40%) Net Income Per Share Data: Common stock price $45.00 $1.80 $1.08 Earnings per share (EPS) Dividends per share (OPs) tly has 100,000 shares outstanding. It expects to maintain its 2016 dividend reduce its Suppose that in 2017, sales increase by 15% over 2016 sales. The firm curren payout ratio and believes that its assets should grow at the same rate as operating costs/sales ratio to 89.5% and increase its total liabilities-to-assets ratio to 30%. (It believes its liabilities-to-assets ratio currently is too relative to the industry average.) The firm will raise 30% of the for the remainder. The firm forecasts that its before-tax cost of debt (which includes both short-term and long-term debt) is 12.5%. Assume that any common stock issuances or repurchases can be made at the firm's current stock price of $45. sales. The firm has no excess capacity. However, the firm would like to 2017 forecasted interest-bearing debt as notes payable, and it will issue long-term bonds orecasted financial statements assuming that these changes are made. What are the firm's forecasted notes payable and long-ternm debt balances? What is the forecasted addition to retained earnings? Round your answers to the nearest cent. Morrissey Technologies Inc. Pro Forma Income Statement December 31, 2017 2012 2016 $3,600,000 3,279,720 Sales Session Timeout 59:47 Operating costs (includes depreciation) 320,280 20,280 $300,000 120,000 160,000 EBIT Interest expense Taxes (40%) Net Income Dividends Addition to reteined earnings Morrissey Technologies Inc. Pro Forma Balance Statement December 31, 2017 2016 2017 Assets Cash Accounts receivable $180,000 360,000 720,000 1,440,000 $2,700,000 Fixed assets Total assets Liabiobies and Equity Payables+accruals 540,000 56,000 $596,000 100,000 $696,000 1,800,000 204,000 $2,004,000 $2,700,000 Short-term bank loans Total current liabilities Long-term bonds Total liabilities Common stock Retained earnings Total common equity Total labilities and equity b. If the profit margin remains at 5% and the dividend payout ratio remains at 60%, at what growth rate in ialies will the idditioninnancing requirements be exactly zero? In other words, what is the firm's sustainable growth rate? (Hint: Set AFN equal to zero and solve for g.) Round your answer to two decimal places ADDITIONAL FUNDS NEEDED Morrissey Technologies Inc.'s 2016 financial statements are shown here Morrissey Technologies Inc.: Balance Sheet as of December 31, 2016 Cash Accounts payable Notes payable Accrued liabilities $180,000 360,000 720,000 $360,000 56,000 180,000 $1,260,000 Total current liabilities $596,000 100,000 1,800,000 204,000 $2,700,000 Total current assets Long-term debt Common stock Retained earnings Fixed assets 1,440,000 2,700,000 Total liabilities and Total assets equity for December 31, 2016 Morrissey Technologies Inc.: Income Statement $3,600,000 3,279,720 Operating costs including $320,280 20,280 300,000 120,000 180,000 EBIT Interest EBT Taxes (40%) Net Income Per Share Data: Common stock price $45.00 $1.80 $1.08 Earnings per share (EPS) Dividends per share (OPs) tly has 100,000 shares outstanding. It expects to maintain its 2016 dividend reduce its Suppose that in 2017, sales increase by 15% over 2016 sales. The firm curren payout ratio and believes that its assets should grow at the same rate as operating costs/sales ratio to 89.5% and increase its total liabilities-to-assets ratio to 30%. (It believes its liabilities-to-assets ratio currently is too relative to the industry average.) The firm will raise 30% of the for the remainder. The firm forecasts that its before-tax cost of debt (which includes both short-term and long-term debt) is 12.5%. Assume that any common stock issuances or repurchases can be made at the firm's current stock price of $45. sales. The firm has no excess capacity. However, the firm would like to 2017 forecasted interest-bearing debt as notes payable, and it will issue long-term bonds orecasted financial statements assuming that these changes are made. What are the firm's forecasted notes payable and long-ternm debt balances? What is the forecasted addition to retained earnings? Round your answers to the nearest cent. Morrissey Technologies Inc. Pro Forma Income Statement December 31, 2017 2012 2016 $3,600,000 3,279,720 Sales Session Timeout 59:47 Operating costs (includes depreciation) 320,280 20,280 $300,000 120,000 160,000 EBIT Interest expense Taxes (40%) Net Income Dividends Addition to reteined earnings Morrissey Technologies Inc. Pro Forma Balance Statement December 31, 2017 2016 2017 Assets Cash Accounts receivable $180,000 360,000 720,000 1,440,000 $2,700,000 Fixed assets Total assets Liabiobies and Equity Payables+accruals 540,000 56,000 $596,000 100,000 $696,000 1,800,000 204,000 $2,004,000 $2,700,000 Short-term bank loans Total current liabilities Long-term bonds Total liabilities Common stock Retained earnings Total common equity Total labilities and equity b. If the profit margin remains at 5% and the dividend payout ratio remains at 60%, at what growth rate in ialies will the idditioninnancing requirements be exactly zero? In other words, what is the firm's sustainable growth rate? (Hint: Set AFN equal to zero and solve for g.) Round your answer to two decimal places