Sales and costs are projected to grow at 20% a year for at least the next 4 years. Both current assets and accounts payable are projected to rise in proportion to sales. The firm is currently operating at 75% capacity, so it plans to increase fixed assets in proportion to sales. Interest expense will equal 10% of long-term debt outstanding at the start of the year. The firm will maintain a dividend payout ratio of 0.40.

What is the required external financing over the next year?

EXTERNAL FINANCING=

The 2019 nancial statements for Growth Industries are presented below. INCOME STATEMENT, 2019 Sales 5 350,000 Costs 225,000 EBIT $ 125,000 Interest expense 25,000 Taxable income $ 100,000 Taxes (at 21%) 21,000 Net income $ 79,000 Dividends $ 31,600 Addition to retained earnings $47,400 BALANCE SHEET, YEAREND, 2019 Assets Liabilities Current assets Current liabilities Cash $ 4,000 Accounts payable $ 11,000 Accounts receivable 9,000 Total current liabilities $ 11,000 Inventories 27,000 Long-term debt 250,000 Total current assets 5 40,000 Stockholders' equity Net plant and equipment 290,000 Common stock plus additional paid-in capital 15,000 Retained earnings 54,000 Total assets $ 330,000 Total liabilities plus stockholders' equity $ 330,000