Mansfield Corporation had 2013 sales of $100 million. The balance sheet items that vary directly with sales and the profit margin are as follows:

Cash	5%
Accounts Receivable	15%
Inventory	20%
Net Fixed Assets	40%
Accounts Payable	15%
Accurals	10%
Profit Margin after taxes	10%

The dividend payout rate is 50 percent of earnings, and the balance is retained earnings at the end of 2013 was $33 million. Notes payable are currently $7 million. Long-term bonds and common stock are constant at $5 million and $10 million, respectively.

a. How much additional external capital will be required for next year if sales increase by 15 percent? (Assume that the company is already operating at full capacity.)

b. What will happen to external fund requirements is Mansfield Corporation reduces the payout ratio, grows at a slower rate, or suffers a decline in its profit margin? Discuss each of these seperately.

c. Prepare a pro forma balance sheet for 2014 assuming that any external funds being acquired will be in the form of notes payable. Disregard the information in part B in answering this question (that is, use the original information and part A in constructing your pro forma balance sheet).