Hawkins Laboratories has assets of $15 million supported by $5million in debt and $10 million in owners equity. Its 2021 net income was $3 million, and its retention ratio was 30%. Assume that net income grows at the same rate as assets, and that funding for the increase in assets first comes only from additions to retained earnings.

1 A) Find external funding needed for growth rates of:

a. 10%

b. 15%

1 B) How much debt has to be added to maintain Hawkins debt to equity ratio when it grows by:

a. 10%

b. 15%

1 C) In words, describe what happens to Hawkins debt to equity ratio if it grows at:

a. Its Internal Growth Rate

b. Its Sustainable Growth Rate

c. More than its Sustainable Growth Rate and uses only debt for its external financing needs.