These are your financial statements for the year ending today: BALANCE SHEET Cash Receivables Inventories Total Current Assets Net Fixed Assets $ 340,000 4,200,000 4,960,000 $ 9,500,000 2.500.000 Accounts Payable Accruals Notes Payable Total Current Liabilities Long-term Debt Common Stock Retained Earnings Total Liabilities and Equity $ 2,720,000 980,000 1.300.000 $ 5,000,000 2,000,000 3,800,000 1.200.000 $12,000,000 Total Assets $12,000,000 INCOME STATEMENT Sales Less: Operating costs EBIT Less: Interest EBT Less: Taxes (40%) Net Income Less: Dividends Additions to Retained Earnings $36,500,000 29,200,000 $ 7,300,000 500.000 $ 6,800,000 2.720.000 $ 4,080,000 3,500,000 $ 580,000 You expect sales to increase 25% next year. Assume you are currently operating at 90% capacity Interest expense next year will be 10% of any interest-bearing debt balance at the beginning of the year Dividends will double next year Operating costs are 50% fixed and 50% variable Days Sales Outstanding are expected to increase by 6 days next year (365 day year) Days Payables Outstanding are expected to increase by 2 days next year Cash is expected to remain constant next year Using a pro forma income statement to estimate the additions to retained earnings, how much external funds do you project needing to support the 25% sales growth? If the additional funds were raised using long-term debt, immediately, how would that affect your additional funds estimate? Project your income statement and balance sheet under both scenarios: first estimate and second estimate