Hungry Kids 2012 Income Statement
Net sales	$	4,600
Cost of goods sold		3,250
Depreciation		680
Earnings before interest and taxes	$	670
Interest paid		165
Taxable Income	$	505
Taxes		200
Net income	$	305
Dividends	$	64
Addition to retained earnings	$	241

Hungry Kids 2012 Balance Sheet
	2012				2012
Cash	$	65		Accounts payable	$	1,275
Accounts rec.		460		Long-term debt		1,560
Inventory		950		Common stock	$	2,100
Total	$	1,475		Retained earnings		3,140
Net fixed assets		6,600
Total assets	$	8,075		Total liabilities & equity	$	8,075

Hungry Kids is currently operating at full capacity. The profit margin and the dividend payout ratio are held constant. Net working capital and fixed assets vary directly with sales. Sales are projected to increase by 4 percent. What is the external financing need?

a. $64

b. $20

c. $63

d. $62

e. $21