The Optical Scam Company has forecast an 18 percent sales growth rate for next year. The current financial statements are shown below. Current assets, fixed assets, and short-term debt are proportional to sales.

a. Using the equation from the chapter, calculate the external funds needed for next year.
b. Construct the firm€™s pro forma balance sheet for next year and confirm the external funds needed you calculated in part (a).
c. Calculate the sustainable growth rate for the company.
d. Can Optical Scam eliminate the need for external funds by changing its dividend policy?
What other options are available to the company to meet its growth objectives?

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INCOME STATEMENT Sales Costs Taxable income Taxes Net income $37,000,000 28,900,000 S 8,100,000 2,835,000 S 5,265,000 Dividends Additions to retained earnings $1,579,500 $3,685,500 BALANCE SHEET Assets Liabilities and Equity Current assets $10,500,000 Short-term debt Long-term debt S 6,500,000 7,000,000 Fixed assets 30,000,000 $ 3,000,000 24,000,000 $27,000,000 S40 500000 Common stock Accumulated retained eanings Total asets $0,50000 Total equity Total liabilities and equity Total assets