Consider the following information for the percentage of sales approach:

Sales = $3M, NI = $0.4M, Retention ratio = 0.75 Total Asset = $4M Current Liability $0.2M Long-term debt = $1M Equity = $2.8M

If sales increase by 35% (and NI, assets, and CL increase at the same rate), calculate the external financing needed.

Answer choices are:

a.) 0.575

b.) 1.100

c.) 0.750

d.) 0.400

e.) 0.925

Please show all calculations.