Calculate the sustainable growth rate of East Coast Yachts. Prepare pro forma income statement and balance sheet. Assume that sales, cost of goods sold, other expenses, current assets (cash, accounts receivable, and inventory), fixed assets, and current liabilities (accounts payable and notes payable) grow at precisely this rate. Also assume that depreciation, interest, long-term debt, and common stock remain the same. Compute external fund needed (EFN). ***Sustainable growth rate=(ROE*b)/(1-(ROE*b))

EAST COAST YACHTS 2019 Income Statement Sales Cost of goods sold Other expenses Depreciation Earnings before interest and taxes (EBIT) Interest Taxable income Taxes (40%) Net income Dividends $7,537,320 Addition to RE 5,024,880 $167,310,000 117,910,000 19,994,000 5,460,000 $23,946,000 3,009,000 $20,937,000 8,374,800 $12,562,200 EAST COAST YACHTS Balance Sheet as of December 31, 2019 Assets Liabilities & Equity Current assets Cash Accounts receivable Inventory Total Current liabilities Accounts payable Notes payable $6,461,000 13,078,000 $3,042,000 5,473,000 6,136,000 $14,651,000 Total $19,539,000 Long-term debt $33.735,000 Fixed assets Net plant and equipment $93,964,000 Shareholders' equity Common stock $5,200,000 Retained earnings 50,141,000 Total equity $55,341,000 Total liabilities $108,615,000 and equity Total assets $108,615,000