Sales for next year are projected to grow by 25 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets and accounts payable increase spontaneously with sales.

1) a. What will be the firm's retained earnings next year.

b. The firm is operating at its full capacity, and it will have to increase its fixed assets as it increases its current assets. What will be the firm's total assets next year.

c. What is the additional funding requirement for the next year

d. If the firm has enough idle capacity and will not have to increase its fixed assets, what will be the additional funding requirement for the next year.

Income Statement of Last Year Sales Costs Other expenses 759,000 594,000 15,000 Earnings before interest and taxe 150,000 16,000 134,000 Interest paid Taxable income Taxes (30%) 40,200 Net income 93,800 Dividends 58,66 Addition to retained earnings ABC, INC. Balance Sheet of Last Year Liabilities and Owners' Equity Current assets Current liabilities Cash Accounts receivable 56,000 15,200 21,840 Accounts payable 34,160 Notes payable 71,120 Total 127,120 Long-term debt Inventory 71,200 142,000 Total Fixed assets Owners equity Net plant and equipmen Common stock and paid- 363,000 128,000 148,920 276,920 in surplus Retained earnings Total Total liabilities and owners equity Total assets 490,120 490,120 Income Statement of Last Year Sales Costs Other expenses 759,000 594,000 15,000 Earnings before interest and taxe 150,000 16,000 134,000 Interest paid Taxable income Taxes (30%) 40,200 Net income 93,800 Dividends 58,66 Addition to retained earnings ABC, INC. Balance Sheet of Last Year Liabilities and Owners' Equity Current assets Current liabilities Cash Accounts receivable 56,000 15,200 21,840 Accounts payable 34,160 Notes payable 71,120 Total 127,120 Long-term debt Inventory 71,200 142,000 Total Fixed assets Owners equity Net plant and equipmen Common stock and paid- 363,000 128,000 148,920 276,920 in surplus Retained earnings Total Total liabilities and owners equity Total assets 490,120 490,120