We consider the company Rosetta Hoffman Co. and give you the following balance sheet and income statement for the year ended 2018 as stated in next sheet.

A 25% growth rate in sales is projected : a. Prepare the pro forma income statement and balance sheet as indicated in the sheet#2 assuming costs vary with sales and dividend payout ratio is constant. b. What is the EFN? Comment. c. Suppose the firm whishes to maintain its debt-to-equity ratio constant. What is the new amount of debt and so the EFN? Comment.

ROSETTA HOFFMAN CO. 2018 Income Statement Sales $ 178 250 Costs $ 110 300 Taxable Income $ 67 950 Taxes (34%) $ 23 103 Net Income $ 44 847 Dividends $ 15 247,98 Addition to Retained Earnings $ 29 599,02 ROSETTA HOFFMAN CO. Balance Sheet as of December 31, 2018 Assets Liabilities & Owners' Equity $ Current Assets Cash Accounts Receivable Inventory Total Fixed Assets Net Plant & Equipment $ 43 200 $ 98 560,91 $ 22 309 $ 164 069,91 20 510,89 12 300 32 811 23 500 Current Liabilities Accounts Payables Notes Payable Total Long-Term Debt Owners' Equity Common Stock & Paid-in Surplus Retained Earnings Total Total Liabilities & Owners' Equity $ 117 840 $ 167 000 $ 58 599,02 $ 225 599,02 $ 281 909,91 La Total Assets $ 281 909,91 ROSETTA HOFFMAN CO. 2018 Income Statement Sales $ 178 250 Costs $ 110 300 Taxable Income $ 67 950 Taxes (34%) $ 23 103 Net Income $ 44 847 Dividends $ 15 247,98 Addition to Retained Earnings $ 29 599,02 ROSETTA HOFFMAN CO. Balance Sheet as of December 31, 2018 Assets Liabilities & Owners' Equity $ Current Assets Cash Accounts Receivable Inventory Total Fixed Assets Net Plant & Equipment $ 43 200 $ 98 560,91 $ 22 309 $ 164 069,91 20 510,89 12 300 32 811 23 500 Current Liabilities Accounts Payables Notes Payable Total Long-Term Debt Owners' Equity Common Stock & Paid-in Surplus Retained Earnings Total Total Liabilities & Owners' Equity $ 117 840 $ 167 000 $ 58 599,02 $ 225 599,02 $ 281 909,91 La Total Assets $ 281 909,91