Answer:
$33,137
Explanation:
The computation of the external financing need is shown below:
But before that the following calculations need to be required:
Projected assets = Projected sales × Assets ÷ Sales ratio
= $29,400 × $108,000 ÷ $22,100
= $143,674
Projected cost = Projected sales × cost ÷ sales ratio
= $29,400 × $17,400 ÷ $22,100
= $23,147
The projected net income = (Projected sales - projected cost) × ( 1 - tax rate)
= ($29,400 - $23,147) × (1 - 0.21)
= $4,315
The current dividend payout ratio = Dividend ÷ Net income
= $1,530 ÷ $3,713
= 41.21%
The projected dividend = Projected net income × dividend payout ratio
= $4,315 × 41.21%
= $1,778
Projected equity = Equity + projected net income - projected dividend
= $65,400 + $4,315 - $1,778
= $67,937
Projected debt = Projected assets - projected equity
= $143,674 - $67,937
= $75,737
Now the external financing debt is
= Projected debt - debt
= $75,737 - $42,600
= $33,137
