Morrissey Technologies Inc.: Balance Sheet as of December 31, 2001 Cash $ 180,000 Accounts payable $ 360,000 Receivables 360,000 Notes payable 156,000 Inventories 720,000 Accruals 180,000 Total current assets $1,260,000 Total current liabilities $ 696,000 Fixed assets 1.440,000 Common stock 1,800,000 Retained earnings 204,000 Total assets $2,700,000 Total liabilities and equity $2,700,000 Sales Morrissey Technologies Inc.: Income Statement for December 31, 2001 $3,600,000 Operating costs 3,279,720 EBIT $ 320,280 Interest 20,280 $ 300,000 Taxes (40%) 120,000 Net income S 180,000 PER SHARE DATA: Common stock price $24.00 Earnings per share (EPS) $ 1.80 Dividends per share (DPS) S 1.08 a. Suppose that in 2002 sales increase by 10 percent over 2001 sales and that 2002 DPS will increase to $1.12. Construct the pro forma financial statements using the pro- jected financial statement method. Use AFN to balance the pro forma balance sheet. How much additional capital will be required? Assume the firm operated at full ca- pacity in 2001. b. If the profit margin were to remain at 5 percent and the dividend payout rate were to remain at 60 percent, at what growth rate in sales would the additional financing requirements be exactly zero? (Hint: Set AFN equal to zero and solve for g.)