Need help with part B. I answered part A. I need help with the constant growth method

Gainesville Surgicenter Inc. is a large, ambulatory surgery center owned by a group practice of surgeons in Gainesville, Florida. The 2014 financial statements for the firm are shown below: Balance Sheet as ofDecenlber 31, 2014 (Thousands of dollars) Cash $1,800 Accounts payable 57,2 00 Receivables $ 10,800 Notes payable $3,472 Inventories $12,600 Accruals $2,520 Total current assets $25,200 Total current liabilities $13,] 92 Net fixed assets $21,600 Mortgage bonds $5,000 Common stock $2,000 Retained earnings $26,608 Total assets $46,800 Total liabilities & equity $46,800 Income Statement for 2014 (Thousands of doars) Revenues $36,000 Operating costs $0,783 Earnings before interest and taxes $5,217 Interest 1 017 Earnings before taxes $4,200 Taxes (40%) $1,680 Net income $2,520 Dividends (60%) $1,512 Addition to retained earnings $1,008 a. Assume that the company was operating at full capacity in 2014 with regard to all items except fixed assets (operating rooms and support space); fixed assets in 2014 were utilized to only 75 percent of capacity. By what percentage could 2015 revenues increase over 2014 revenues without the need for an increase in fixed assets? b. Now suppose 2015 revenues increase by 25 percent over 2014 revenues. Use the constant growth method to develop a pro forma balance sheet and income statement as in Exhibit 14.4. Assume that Gainesville cannot sell any fixed assets and that any nancing required is borrowed as notes payable at an interest rate of 12 percent. ANSWER a) Calculating the increase in Sales revenue without the need for an increase in fixed assets. From Fixed asset turnover ratio, Fixed asset turnover ratio = Sales I Net fixed assets = $36,000 I $16,200 = 2.2 Since fixed assets are not operating at full capacity. Only 75 % of the fixed assets are utilized to the ful