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Below are shown the financial statements of Eagle Sport Supply. For simplicity, Costs include interest expense. Assume that Eagle's assets are proportional to its sales.

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Below are shown the financial statements of Eagle Sport Supply. For simplicity, "Costs" include interest expense. Assume that Eagle's assets are proportional to its sales. a) Find Eagle's required external funds if it maintains a dividend payout ratio of 60% and plans a growth rate of 15% in both sales and assets. Assume that the tax rate does not change. b) Now suppose that the firm instead plans to increase long-term debt only to $1, 100 and does not wish to issue any new shares of stock. Why must the dividend payment now be the balancing item? What will its value be? c) What is the internal growth rate of Eagle Sport if the dividend payout ratio is fixed at 60% and the equity-to-assets ratio is fixed at two-thirds? What is the sustainable growth rate (assume return on equity is based on beginning period equity)

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