The 2017 financial statements for Growth Industries are presented below.

INCOME STATEMENT, 2017Sales$360,000Costs230,000EBIT$130,000Interest expense26,000Taxable income$104,000Taxes (at 35%)36,400Net income$67,600Dividends$33,800Addition to retained earnings33,800

BALANCE SHEET, YEAR-END, 2017AssetsLiabilitiesCurrent assetsCurrent liabilitiesCash$5,000Accounts payable$12,000Accounts receivable10,000Total current liabilities$12,000Inventories35,000Long-term debt260,000Total current assets$50,000Stockholders' equityNet plant and equipment300,000Common stock plus additional paid-in capital15,000Retained earnings63,000Total assets$350,000Total liabilities and stockholders' equity$350,000

Sales and costs are projected to grow at 30% 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 0.50.