Morrissey Technologies Inc.'s 2021 financial statements are shown here.

Morrissey Technologies Inc.: Balance Sheet as of December 31, 2021
Cash	$	260,000		Accounts payable	$	520,000
Receivables		520,000		Accrued liabilities		260,000
Inventories		1,040,000		Notes payable		80,000
Total current assets	$	1,820,000		Total current liabilities	$	860,000
				Long-term debt		120,000
Fixed assets		2,080,000		Common stock		2,600,000
				Retained earnings		320,000
Total assets	$	3,900,000		Total liabilities and equity	$	3,900,000

Morrissey Technologies Inc.: Income Statement for December 31, 2021
Sales	$	5,200,000
Operating costs including depreciation		4,914,000
EBIT	$	286,000
Interest		26,000
EBT	$	260,000
Taxes (25%)		65,000
Net income	$	195,000

Per share data:
Common stock price	$	66.00
Earnings per share (EPS)	$	1.95
Dividends per share (DPS)	$	1.17

Suppose that in 2022, sales increase by 12% over 2021 sales. The firm currently has 100,000 shares outstanding. It expects to maintain its 2021 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 90.5% and increase its total liabilities-to-assets ratio to 35%. (It believes its liabilities-to-assets ratio currently is too low relative to the industry average.) The firm will raise 20% of the 2022 forecasted interest-bearing debt as notes payable, and it 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 any common stock issuances or repurchases can be made at the firm's current stock price of $66.

The data has been collected in the Microsoft Excel file below. Download the spreadsheet and perform the required analysis to answer the questions below. Do not round intermediate calculations.

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? Round your answers to the nearest cent.

Morrissey Technologies Inc.: Pro Forma Income Statement for December 31, 2022
Sales	$
Operating costs including depreciation
Earnings before interest and taxes (EBIT)	$
Interest
Earnings before taxes (EBT)	$
Taxes (25%)
Net income (NI)	$
Dividends	$
Addition to retained earnings	$
Morrissey Technologies Inc.: Pro Forma Balance Sheet as of December 31, 2022
Assets
Cash	$
Receivables
Inventories
Total current assets	$
Fixed assets
Total assets	$
Liabilities and Equity
Accounts payable	$
Accrued liabilities
Notes payable
Total current liabilities	$
Long-term debt
Total liabilities	$
Common stock
Retained earnings
Total common equity	$
Total liabilities and equity	$

If the profit margin remains at 3.75% and the dividend payout ratio remains at 60%, at what growth rate in sales will the additional financing requirements be exactly zero? In other words, what is the firm's sustainable growth rate? (Hint: Set AFN equal to zero and solve for g.) Round your answer to two decimal places.

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