Galehouse Gas Stations Inc. expects sales to increase from $1,550,000

to $1,750,000 next year. Mr. Galehouse believes that net assets

(Assets

2

Liabilities) will represent 50 percent of sales. His firm has an

8 percent return on sales and pays 45 percent of profits out as dividends.

a .

What effect will this growth have on funds?

b .

If the dividend payout is only 25 percent, what effect will this growth have

on funds?