b. 3&5 Air is planning for a growth rate of 12% next year. Calculate the EFN for the company, assuming the company is operating at full capacity. Further assume that costs and other expenses vary with sales. as do the current assets, fixed assets, and accounts payable. All else remains constant. Can the company's sales increase at this growth rate? c. Most assets can be increased as a percentage of sales. However, fixed assets must be increased in specific amounts because it is impossible, as a practical matter, to buy part of a new plant or machine In this case, a company has a lumpy fixed cost structure. Assume S & S Air is currently producing at 100% capacity. As a result, to increase production, the company must set up an entirely new line at a cost of $5,000,000. Calculate the new EFN with this new assumption S & S AIR 2011 Income Statement Sales $ Costs $ Other Expenses $ Depreciation $ EBIT $ Interest Paid $ Taxable income Taxes $ Net Income $ Dividends $ Addition to Retained Earnings $ 36,599,300 26,669,496 4,641,000 1,640,200 3,648,604 573,200 3,075,404 1,230,162 1,845 242 560,000 1,285,242 GA A A S&S AIR 2011 Balance Sheet Current Assets Current Liabilities Cash $ 396,900 AVP AVR $ 637.560 N/P Inventory $ 933.400 Total Total S 1Z 860 Long Term Debt Total Debt Fixed Assets Owners Equity Net Plant & Equipment $ 15.411.620 Common R/E Total Equity $ 844,650 $ 1,928 500 $ 2.773.050 $ 5.050.000 $ 7.823.050 9 322,500 $ 9233 930 $ 9.556 430 Total Assets $ 15,411 620 Total Liab & Equity S 17 379.480