Comparative income statements and balance sheets for Merck ($ millions) follow: Year 2 Year 1 Income Statement Net sales Cost of goods Gross profit Selling, general and administrative expense. Depreciation and amortization expense. Interest expense Income before tax Income tax expense $47,716 28,977 18,739 6,531 1,464 342 $40,343 22,444 17,899 6,469 1,277 329 10,402 3,121 $ 7,282 9,824 3,002 Net income $ 6,822 2,976 2,968 Outstanding shares Balance Sheet Cash. $ 3,287 5,215 3,579 880 12,961 Receivables. Inventories Other current assets.. Total current assets. Property, plant, and equipment Accumulated depreciation.. Net property, plant, and equipment. Other noncurrent assets. Total assets.. Accounts payable and accrued liabilities Short-term debt and current maturities of long-term debt. Income taxes payable Total current liabilities $ 4,255 5,262 3,022 1,059 13,598 16,707 5,225 11,482 15,075 $40,155 18,956 5,853 13,103 17,942 $44,006 $ 5,391 3,319 $ 5,904 4,067 1,573 11,544 1,244 9,954 Year 2 Year 1 11,768 3,601 Deferred income taxes and other liabilities Long-term debt Total noncurrent liabilities Common stock.. Capital surplus Retained earnings. Treasury stock. Shareholders' equity. Total liabilities and equity. 11,614 4,799 16,413 30 6,907 31,500 (22,387) 15,369 30 6,266 27,395 (18,858) 14,833 $40,154 16,050 $44,007 Required: a. Use the following ratios to prepare a projected income statement, balance sheet, and statement of cash flows for Year 3. Sales growth. 18.27% Gross profit margin 39.27% Selling, general, and administrative expense/Sales. 13.69% Depreciation expense/Prior-year property, plant & equipment (gross). 8.76% Interest expense/Prior-year long-term debt. 4.94% Income tax expense/Pretax income. 30.00% Accounts receivable turnover (Sales/Accounts receivable) 9.15 Inventory turnover (Cost of goods sold/Inventory) 8.10 Accounts payable turnover (Cost of goods sold/Accounts payable) 4.91 Taxes payable/Tax expense.. 50.41% Total assets/Stockholders' equity (financial leverage) 2.35 Dividends per share $ 1.06 Capital expenditures/Sales 9.04% b. Based on your initial projections, how much external financing (long-term debt and/or stockholders' equity) will Merck need to fund its growth at projected increases in sales