Q.1 a) What do you mean by negative AFN. In that do you need additional financing from Financial Institutions, explain? M-02 b) The most recent financial statements for Karachi Traveler Inc., follow. Sales for 2020 are projected to grow by 20 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, and accounts payable increased spontaneously with sales. Sales Costs Other expenses Karachi Traveler Inc 2019 Income Statement $980,000 770,000 14,000 $196,000 Earnings before interest and taxes Interest paid 23,800 $172,200 Taxable income Taxes (35%) Net income Dividends Addition to retained earnings 67,158 60,270 $111,930 $50,000 $61,930 Karachi Traveler Inc Balance Sheet as of December 31, 2019 Assets Current assets Liabilities and Owners' Equity Current liabilities Cash $28,000 Accounts payable $70,000 Accounts receivable 49,000 Notes payable 7,000 Inventory 84,000 Total $77,000 Total $161,000 Long-term debt $168,000 Fixed assets Owners' equity Net plant and Common stock and paid-in surplus $21,000 equipment $385,000 Retained earnings $280,000 Total $301,000 Total assets $546,000 Total liabilities and owners' equity $546,000 Required: M-06 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 percent growth rate in sales? (Dividend will in same ratio of 2019)