Problem 4-27 Calculating EFN (LO2)

The most recent financial statements for Hopington Tours Inc, follow. Sales for 2020 are projected to grow by 20% Interest expense will reman constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, and accounts payable Increase directly with an Increase in sales. If the firm is operating at full capacity and no new debt or equity is issued, what is the external financing needed to support the 20% growth rate in sales? Provide answers to Items (a) to (e).

HOPINGTON TOURS INC. 2019 Statement of Comprehensive Income
Sales	$929.000
Costs	723,000
Other expenses	19,000
Earnings before interest and taxes	$ 187,000
Interest paid	14,000
Taxable income	$ 173,000
Taxes (35%)	60,550
Net income	$ 112.450
Dividends	$33,735
Addition to retained eamings	78,715

HOPINGTON TOURS INC.

Sistement of Financial Position as of December 31, 2019

Assets

Current Assets

Cash $25,300

Accounts receivable $40,700

Inventory $86,900

Total $ 152,900

Fixed assets

Net plant and equipment $413,000

Totsl assets $565,900

Liabilities and Owners' Equity

Current liabilities

Accounts payable $68,000

Notes payable $17,000

Total $85,000

Long-term debt $158,000

Owners' equity

Common stock and paid-in surplus $140,000

Retained earnings $182,900

Total $322,99

Total liabilities and owners' equity $565,900

Round your solutions to 2 decimal places. (10 marks)

Required: Provide the following values in solving for EFN. You are not required to show all of your work.

1. Proforma net income or net loss in dollars
2. Dividend payout ratio.
3. Proforma dividends in dollars.
4. Proforma addition to retained earnings in dollars.
5. EFN in dollars.