Answer:
Projected total assets = <u>$10,318
</u>
Projected retained earnings = <u>$4,675.30
</u>
Additional new debt required = <u>$537.70</u>
Explanation:
external financing needed = EFN = [(total assets/total sales) x ($ Δ sales)] - [(total current liabilities/total sales) x ($ Δ sales)] - [profit margin x forecasted sales in $ x (1 - dividend payout ratio)]
total assets = $9,380, projected total assets = $9,380 x 1.1 = $10,318
total sales = $7,800
$ Δ sales = $780
current liabilities = $1,550
profit margin = net income / sales = $410 / $7,800 = 0.052564
forecasted sales = $7,800 x 1.1 = $8,580
dividends payout ratio = dividends / net income = $187 / $410 = 0.4561
EFN = [($9,380/$7,800) x ($780)] - [($1,550/$7,800) x ($780)] - [0.052564 x $8,580 x (1 - 0.4561)]
EFN = $938 - $155 - $245.30 = $537.70
projected retained earnings = current retained earnings - projected net income - projected dividends = $4,430 + $451 - $205.70 = $4,675.30
