In 2022, Olde Towne Corporation (OTC) had sales of $35 million, net income of $5.6. million, and a dividend payout ratio of 40%. The firm's total assets were $40 million and the firm had accounts payable and accruals of $7 million. All assets are presently being used at maximum capacity.

1. IFOTC expects sales to increase by 30% next year, what will be the amount of discretionary financing needed?

1. $5.53 million
2. $6.82 million
3. $7.03 million
4. $7.93 million
5. none of the above

2. What is Olde Towne's sustainable growth rate?

a. 7.21%

b. 8.93%

c. 9.70%

d. 11.34%

e. none of the above