The 2012 financial statements for Growth Industries are presented below. Sales and costs in 2013 are projected to be 20% higher than in 2012. Both current assets and accounts payable are projected to rise in proportion to sales. The firm is currently operating at full capacity, so it plans to increase fixed assets in proportion to sales. What external financing will be required by the firm? Interest expense in 2013 will equal 10% of long-term debt outstanding at the start of the year. The firm will maintain a dividend payout ratio of .40.

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INCOME STATEMENT, 2012 Sales Costs EBIT Interest expense Taxable income Taxes a 35.00% Net income 200,000.00 150,000.00 50,000.00 10.000.00 40.000.00 14,000.00 26,000.00 Dividends Addition to retained earnings 10,400.00 15,600.00 BALANCE SHEET, YEAR-END, 2012 Assets Liabilities Current assets Current liabilities Cash Accounts receivable Inventories S 10,000.00 S 10,000.00 100,000.00 S 3,000.00 Accounts payable 8,000.00 Total current liabilities 29,000.00 Long-term debt Total current assets Net plant and equipment S 40,000.00 Stockholders' equity 160,000.00 Comon stock plus aditional 15,000.00 paid-in capital Retained earnings 75,000.00 Total liabilities plus Total assets S 200,000.00 stockholders' equity $200,000.00 Projected sales and cost Interest expense Dividend payout ratio 20.00% higher 10.00% of long term debt 0.40