You work for Shasta Inc. Sales are expected to grow by 30% next year. The firm is currently operating at 80% capacity. Current assets, current liabilities and cost of goods sold will grow with sales. Interest expense will not change. The firm pays out 78% of net income as dividends. Leave long-term debt constant. The current income statement and balance sheet are below. Please show your work. Carry work out to 1 decimal point.

Income Statement: Fiscal Year Ending	12/31/Y0
Sales	60
Cost of Goods Sold	30
Depreciation	5
Earnings Before Interest & Tax (EBIT)	25
Interest Expense	5
Earnings Before Tax	20
Taxes (25%)	5
Net Income	15

BALANCE SHEET (in M)

Assets		Liabilities and Net Worth
Fiscal Year Ending	12/31/Y0	Fiscal Year Ending	12/31/Y0
Total Current Assets	45	Total Current Liabilities	25
Net Prop & Equip	55	Long Term Debt	15
		Shareholder Equity	60
TOTAL ASSETS	100	TOTAL LIAB & EQUITY	100

a) Calculate the additional funds needed (AFN) using the balance sheet and income statement.

b) Calculate the AFN using the formula

c) Why are the two answers different? Explain.