You are hired to analyze XYZ Inc.$\text{'}$s financial plan. The most recent

statements show sales of $$500,000$ and costs of $$400,000.$ Cash, account receivables, and inventory are $5\%,10\%,$ and $5\%$ of sales, respectively. Additionally, net plant and equipment equal $$300,000.$

The firm has accounts payable equal to $10\%$ of sales, notes payable equal to $$40,000,$ and long$-$term debt equal to $$80,000.$

The firm's equity is divided into $$150,000$ of common stock and $$80,000$ of retained earnings.

Costs, current assets, fixed assets, and accounts payable are assumed to vary with sales.

The firm uses a constant dividend payout ratio of $60\%,$ taxes are equal to $21\%$ and is currently operating at $90\%$ capacity.

a$)$ Obtain the EFN if the firm plans to have sales growth equal to $20\%(20$ points$)$

b$)$ Use your financial model to estimate the internal growth rate $($Hint: look at the

table and graph constructed in example $3$ of chapter $4$ lecture$)(20$ points$)$

c$)$ Use the formula method to obtain the internal growth rate. The formula is in slide

$8$ of chapter $4.(5$ points$)$

d$)$ Explain why the internal growth rates obtained in b$)$ and c$)$ differ. $(5$ points$)$