Suppose 2020 revenues increase by 25 percent over 2019 revenues. Use the constant growth method to develop a pro forma balance sheet and income statement as in Exhibit 14.4, but you only need to complete for the first pass. Assume that Gainesville cannot sell any fixed assets and that any financing required is borrowed as notes payable at an interest rate of 12 percent. What would be the external funding requirement after the first pass?

		$2,500
		$2,131
		$3,400
		$3,225

Gainesville Surgicenter Inc.

Balance Sheet as of December 31, 2019 (Thousands of dollars)
Cash		$1,800		Accounts payable		$7,200
Receivables		$10,800		Notes payable		$3,472
Inventories		$12,600		Accruals		$2,520
Total current assets		$25,200		Total current liabilities		$13,192
Net fixed assets		$21,600		Mortgage bonds		$5,000
				Common stock		$2,000
				Retained earnings		$26,608
Total assets		$46,800		Total liabilities & equity		$46,800
Income Statement for 2019 (Thousands of dollars)
Revenues			$36,000
Operating costs			$30,783
Earnings before interest and taxes			$5,217
Interest			$1,017
Earnings before taxes			$4,200
Taxes (21%)			$1,680
Net income			$2,520
Dividends (60%)			$1,512
Addition to retained earnings			$1,008