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

Sales60

Cost of Goods Sold30

Depreciation5

Earnings Before Interest & Tax (EBIT)25

Interest Expense5

Earnings Before Tax20

Taxes (25%)5

Net Income15

BALANCE SHEET (in M)

Asset 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.