CASE 1 (45 points) The most recent financial statements for Michel Corporation follow. Sales for year 2022 are projected to increase by 12 percent. Tax rate will be 25% in year 2022. The company maintains a constant dividend pay-out ratio. The firm is operating at full capacity. Income Statement 2021 Balance Sheet 2021 Sales 40 670 530 Assets Liabilities and Equity Cost of goods sold 30 338 915 Operating expenses 5 157 255 Depreciation 1 822 652 Operating income 3 351 708 Interest 636 962 Current assets Cash Accounts receivable Inventory Total CA Current liabilities 461 153 Accounts payable 938 496 740 615 Notes payable 2 143 023 1 085 026 2 286 794 Total CL 3 081 519 Taxable income Taxes 2 714 746 678 687 Long-term debt 5 534 228 Net income 2 036 059 Fixed assets Net PP&E 17 904 498 Dividends Addition to retained earnings 619 307 1 416 753 Shareholder equity Common stock Retained earnings 404 087 11 171 458 Total equity 11 575 545 Total Assets 20 191 292 Total L&E 20 191 292 Instructions: 1.1 Calculate internal and sustainable growth rates. Explain what they mean. (10 points) 1.2 Using the percentage of sales approach, prepare proforma financial statements for year 2022. (20 points) 1.3 Calculate the amount of external financing needed in 2022. What financing options are available for the company? (5 points) 1.4 Assuming that the company operated at 85% capacity in 2021, re-calculate the amount of external financing needed in 2022. (5 points) 1.5 Discuss the role of financial planning. (5 points)