Problem 2-Abbreviated financial statements for Archimedes Levers are shown below. If sales increase by 20% in 2018 and all other costs, assets and debt, increase correspondingly (by 20%), what must be the balancing item? What will be its value?

Income Statement 2017
Sales	$4,000
Costs including interest	$3,500
Net Income	$500
Balance Sheet, Year End
	2017	2016			2017	2016
Net Assets	$3,200	$2,700		Debt	$1,200	$1,033
				Equity	$2,000	$1,667
Total	$3,200	$2,700		Total	$3,200	$2,700

What is the maximum possible growth rate for Archimedes (see Problem 2 above) for 2017 if the payout ratio is set at 40% and

1. no external debt or equity is to be issued?

2. the firm maintains a fixed debt ratio but issues no equity?