Assume that sales for Global Gold Inc. are forecast to grow by 20% in 2021. Interest expense, the tax rate and the dividend payout ratio remain the same as in 2020. Direct costs, SG&A, current assets and Accounts Payable increase at 20%, the same growth rate as sales. Notes payable, long term debt and common stock do not change. Assume that initially the firm is operating at capacity.

1) How many dollars are forecast to be paid out as dividends in 2021?

a. $50,949

b. $43,409

c. $77,961

d. $51,974

2) Which of the following are possible solutions to satisfy some of Global Golds total financing needs in 2021?

a. Issue new common stock

b. Reduce the dividend payout ratio

c. Increase long-term debt

d. Increase short-term debt

e. All of the above

Global Gold Inc. Income Statement January 1 to December 31, 2020 $905,000 Proforma Income Statement 2021 Sales Direct Costs 710,000 S, G&A 12,000 EBIT 183,000 Interest expense 19,700 Income Before Tax 163,300 Income Tax (35%) 57,155 Net Income 106,145 Dividends $42,458 $63,687 Addition to R.E. Assets Current Assets Cash Accounts Receivable Inventory Total Current Assets Global Gold Inc. Balance Sheet As of December 31, 2020 Liabilities & Owner's Equity Current Liabilities $ 25,000 Accounts Payable $ 43,000 Notes Payable $ 76,000 Total Current Liabilities $144,000 Long Term Debt Owner's Equity $364,000 Common Stock Retained Earnings $508,000 Total Liab & Owner's Equity $65,000 $ 9,000 $74,000 $156,000 Fixed Assets Net Plant & Equip. $ 21,000 $257,000 $508,000 Total Assets