Morrissey Technologies Inc.: Balance Sheet as of December 31, 2019 Cash $180,000 Accounts payable $360,000 Notes payable Receivables 360,000 56,000 720,000 Inventories Accrued liabilities 180,000 $1,260,000 Total current liabilities $596,000 Total current assets 100,000 Long-term debt Fixed assets Common stock 1,440,000 1,800,000 Retained earnings 204,000 Total liabilities and Total assets $2,700,000 $2,700,000 equity Morrissey Technologies Inc.: Income Statement for December 31, 2019 Sales $3,600,000 3,279,720 Operating costs including depreciation BIT $320,280 20,280 Interest T $300,000 Taxes (25%) 75,000 Net Income $225,000 Per Share Data: Common stock price $45.00 Earnings per share (EPS) $2.25 Dividends per share (DPS) $1.35 Suppose that n 2020, sales increase by 20% over 2019 sales. The firm currently has 100,000 shares outstanding. It expects to maintain its 2019 dividend payout ratio and believes that its assets should grow at the same rate as sales. The firm has no excess capacity. However, the firm would like to reduce its operating costs/sales ratio to 86.5% and increase its total liabilities- to-assets ratio to 30% . (It believerite liabilities-to-assets ratio c lea ie too low relative to the industry average.) The firm will raise 30% of the 2020 forecasted interest-bearing debt as will issue long-term bonds for the remainder. The firm forecasts that its before-tax cost of debt (which includes both short- and long-term debt) is 12.5%. Assume that notes payable, and any common stock issuances or repurchases can be made at the firm's current stock price of $45. a. Construct the forecasted financial statements assuming that these changes are made. What are the firm's forecasted notes payable and long-term debt balances? What is the forecasted addition to retained earnings? Do not round intermediate calculations. Round your answers the nearest cent. Morrissey Technologies Inc. Pro Forma Income Statement December 31, 2020 2019 2020 Sales $3,600,000 Operating costs (includes depreciation) 3,279,720 EBIT $320,280 Interest expense 20,280 $300,000 Taxes (25%) 75,000 Net Income $225,000 Dividends (60 %) Addition to retained earnings Morrissey Technologies Inc. Pro Forma Balance Statement December 31, 2020 2019 2020 Assets Cash $180,000 360.000 Accounts receivable Inventories 720,000 Fixed assets 1,440,000 Total assets $2,700,000 Liabilities and Equity Payablesaccruals $540,000 Short-term bank loans 56,000 Total current liabilities $596,000 Long-term bonds 100,000 Total liabilities $696,000 1,800,000 Common stock Retained earnings 204,000 Total common equity $2,004,000 Total liabilities and equity $2,700,000 h. her words what is the firm's sustainable growth rate? (Hint: Set AEN equal to zero and solve for o) Do not round intermediate calculations Bound vour answer to tyo decimal nlaces % Morrissey Technologies Inc.: Balance Sheet as of December 31, 2019 Cash $180,000 Accounts payable $360,000 Notes payable Receivables 360,000 56,000 720,000 Inventories Accrued liabilities 180,000 $1,260,000 Total current liabilities $596,000 Total current assets 100,000 Long-term debt Fixed assets Common stock 1,440,000 1,800,000 Retained earnings 204,000 Total liabilities and Total assets $2,700,000 $2,700,000 equity Morrissey Technologies Inc.: Income Statement for December 31, 2019 Sales $3,600,000 3,279,720 Operating costs including depreciation BIT $320,280 20,280 Interest T $300,000 Taxes (25%) 75,000 Net Income $225,000 Per Share Data: Common stock price $45.00 Earnings per share (EPS) $2.25 Dividends per share (DPS) $1.35 Suppose that n 2020, sales increase by 20% over 2019 sales. The firm currently has 100,000 shares outstanding. It expects to maintain its 2019 dividend payout ratio and believes that its assets should grow at the same rate as sales. The firm has no excess capacity. However, the firm would like to reduce its operating costs/sales ratio to 86.5% and increase its total liabilities- to-assets ratio to 30% . (It believerite liabilities-to-assets ratio c lea ie too low relative to the industry average.) The firm will raise 30% of the 2020 forecasted interest-bearing debt as will issue long-term bonds for the remainder. The firm forecasts that its before-tax cost of debt (which includes both short- and long-term debt) is 12.5%. Assume that notes payable, and any common stock issuances or repurchases can be made at the firm's current stock price of $45. a. Construct the forecasted financial statements assuming that these changes are made. What are the firm's forecasted notes payable and long-term debt balances? What is the forecasted addition to retained earnings? Do not round intermediate calculations. Round your answers the nearest cent. Morrissey Technologies Inc. Pro Forma Income Statement December 31, 2020 2019 2020 Sales $3,600,000 Operating costs (includes depreciation) 3,279,720 EBIT $320,280 Interest expense 20,280 $300,000 Taxes (25%) 75,000 Net Income $225,000 Dividends (60 %) Addition to retained earnings Morrissey Technologies Inc. Pro Forma Balance Statement December 31, 2020 2019 2020 Assets Cash $180,000 360.000 Accounts receivable Inventories 720,000 Fixed assets 1,440,000 Total assets $2,700,000 Liabilities and Equity Payablesaccruals $540,000 Short-term bank loans 56,000 Total current liabilities $596,000 Long-term bonds 100,000 Total liabilities $696,000 1,800,000 Common stock Retained earnings 204,000 Total common equity $2,004,000 Total liabilities and equity $2,700,000 h. her words what is the firm's sustainable growth rate? (Hint: Set AEN equal to zero and solve for o) Do not round intermediate calculations Bound vour answer to tyo decimal nlaces %