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) If Hawkins grows at less than its internal growth rate, what would its retention ratio have to be to avoid either having to buy back some of its stock or debt?

1 b) How much would a $10 million asset company have to have in total equity if it grew by 20% and wanted to keep a debt to ratio of:

a. 40%

b. 80%