1. The most recent financial statements for Company X, follow. Sales for 2021 are projected to grow by 13 percent. Interest expense will remain constant; the tax rate is 20%. Current assets (except inventory), and accounts payable increase spontaneously with sales. Costs-to-Sales ratio would be increased by 20%, payout ratio will be increased by 10%, and inventory will be increased to $300. If the firm is operating at 95% capacity and no new debt or equity is issued, what external financing is needed to support the growth rate in sales?

Income Statement
		2021	2020
Sales			3,000
Costs			2,100
EBIT			900
Interest Expense			100
Taxable Income			800
Taxes			160
Net income			640
Dividends			128
Additional to RE			512

Balance Sheet
		2021	2020				2021		2020
Current Assets				Current Liabilities
Cash			600	Accounts Payable					300
Accounts Receivable			500	Notes Payable					100
Inventory			100	Total					400
Total			1,200
				Long-Term Debt					500
Fixed Assets
Net Plant & Equipment			1,500	Owners' equity
				Common Stocks & Paid-in Surplus				1,200
				Retained Earnings					600
				Total					1,800
Total Assets			2,700	Total Liabilities & Owners' Equity				2,700

EFN = ___________

b. If the company has 400 shares and investors give its stock a valuation of P/E = 6 (based on earnings in 2020), how many new shares is needed to sell to the market to cover the EFN?