All the cessary working 1. The most recent financial statements for James Inc. follow. Sales for 2009 are projected to grow by 30%. Interest expense will remain constant; the tax rate and dividend payout rate will also remain constant. Costs, other expenses, current assets, and accounts payable increase spontaneously will sales. a. Prepare a pro forma income statement for 2009, (4 Marks) b. Prepare a pro forma balance sheet for 2009. (6 Marks) c. If the firm is operating at full capacity and no new debt or equity is issued, how much external financing is needed to support the 30 % growth rate? (2 Marks) d. Suppose, the firm is operating at only 70% capacity and no new debt or equity is issued, how much external financing is needed to support the 15 % growth? (2 Marks) 2008 Income Statement Sales $910,000 Costs 709,000 Other expenses 11.000 Earnings before interest and taxes $190.000 Interest paid 20.900 Taxable income $169.100 Taxes (34) 57.494 Net income $111.606 Dividends $44,642 Addition to retained earnings $66,964 Balance Sheet as of December 31, 2008 Assets Current assets Cash Accounts receivable Inventory Total Fixed assets Net plant and equipment $24,000 42,000 76,000 $142,000 Liabilities and Owners' Equity Current liabilities Accounts payable $66,000 Notes payable 10.000 Total $76,000 Long-term debt $142,000 Owners' equity Common stock and paid-in surplus $23,000 Retained earnings 268,000 Total $291,000 Total liabilities and owners' equity $509,000 $367.000 Total assets $509,000