Problem 19.17 If projected sales growth is actually 8.80%, Calculate the EFN. (Refer to Exhibits 19.10 and 19.11.) (Round answer to 2 decimal places, e.g. 0.45. Enter negative amount using either a negative sign preceding the number e.g. -0.45 or parentheses e.g. (0.45).) Exhibit 19.10 Empire Enterprises: Pro Forma Income Statement and Balance Sheet ($ millions) ) Income Statement Net sales Costs Net income Dividends Additions to retained earnings $ 120.0 108.0 $ 12.0 $ 7.2 $ Balance Sheet Liabilities and Stockholders' Equity Assets Change Change Assets $ 60,0 $ 10.0 $ 20.0 $ 0.0 Total assets Total debt Equity Total liabilities and stockholder's equity External financing needed (EFN) $ 60.0 $ 10.0 34.8 $ 54.8 $ 5.2 4.8 $ 4.8 $ 5.2 The pro forma balance sheet for Empire Enterprises does not balance, and the difference is the amount of EFN. Because the company's board does not wish to issue common stock, the funding will have to take the form of long-term debt. EFN = (Growth rate x Initial assets) - Addition to retained earnings Exhibit 19.11 External Funding Needed (EFN) and A positive EFN EFN = (Growth rate x Initial assets) - Addition to retained earnings At some growth rate (9.6% for Empire Enterprises). EFN-0. A positive EFN means that the firm must find external funding to finance its growth Exhibit 19.11 External Funding Needed (EFN) and Growth for Empire Enterprises The exhibit graphically illustrates Equation 19.6. showing the connection between growth rate in sales and EFN. The horizontal axis plots the firm's projected growth rate, and the vertical axis plots EFN. The upward slope of the line illustrates how external financing increases with the growth rate, assuming that the dividend policy is held constant External Funding Needed ($) $5.2- -$4.8 - Projected Growth Rate At low growth rates, EFN is negative (EFN