• 
  

Microtech Company is a retailer of small computers. Its balance sheet is given as follow: Microtech Company Balance Sheet as of December 31, 2020 (in millions) $100 Accounts payable Cash Accounts receivable Inventories Total current assets Net fixed assets Total assets 200 200 Accruals 500 500 Notes payable Total current liabilities Mortgage loans Total liabilities Common stocks Retained earnings Total common equity $1,000 Total liabilities and equities $50 150 50 250 400 650 100 250 350 $1,000 Sales were $2,000 million and net income was $105 million in 2020. Microtech paid dividend of $42 million to common stockholders. Tax rate is 40%. Assume that Microtech operated at full capacity. All assets/sales ratios, spontaneous liabilities/sales ratios, profit margin and payout ratio are assumed to remain constant in the year 2021. Questions: 1. If sales are projected to increase by 10% during 2021, use the additional fund need method (AFN) to determine Microtech's external fund requirement. 2. Find the self-supporting growth rate of Microtech Inc.?