Question Completion:
The 2017 financial statements for Growth Industries are presented below  
INCOME STATEMENT, 2017  
Sales $ 380,000  
Costs 240,000  
EBIT $ 140,000  
Interest expense 28,000  
Taxable income $ 112,000  
Taxes (at 35%) 39,200
Net income $ 72,800  
Dividends 21,840
Addition to retained earnings 50,960  
BALANCE SHEET, YEAR -END, 2017  
Assets    
Current assets  
Cash      $ 7,000      
Accounts receivable 12,000
Inventories 31,000
Total current assets $ 50,000  
Net plant and equipment 320,000
Total assets $ 370,000
Liabilities
Current liabilities
Accounts payable $ 14,000
Total current liabilities $14,000
Long-term debt Stockholders' equity 280,000
Common stock plus additional paid-in capital 15,000
Retained earnings 61,000  
Total liabilities and stockholders' equity $ 370,000
Answer:
Growth Industries
The required external financing over the next year is:
= $16,600.
Explanation:
a) Data and Calculations:
Sales and costs projected growth rates = 20%
Current assets and accounts payable growth rates = 20%
Fixed assets growth rates = 20%
Interest expense = 10% of long-term debt outstanding
Dividend payout ratio = 0.40
INCOME STATEMENTs,               2017        Projected
Sales                                      $ 380,000   $456,000 ($380,000 * 1.2)
Costs                                        240,000      288,000 ($240,000 * 1.2)
EBIT                                        $ 140,000    $168,000
Interest expense                       28,000        28,000
Taxable income                     $ 112,000    $140,000
Taxes (at 35%)                          39,200        49,000
Net income                            $ 72,800      $91,000
Dividends                                   21,840       36,400
Addition to retained earnings 50,960    $54,600
Retained earnings, 2017  $61,000
Projected addition             54,600
Retained earnings,         $115,600
BALANCE SHEET, YEAR -END, 2017  
Assets                                                                2017   Projected
Current assets  
Cash                                                               $ 7,000      $8,400 ($7,000*1.2)
Accounts receivable                                       12,000       14,400 (12,000*1.2)
Inventories                                                      31,000      37,200 (31,000*1.2)
Total current assets                                   $ 50,000   $60,000
Net plant and equipment                           320,000    384,000 ($320,000*1.2)
Total assets                                             $ 370,000 $ 444,000
Liabilities
Current liabilities
Accounts payable                                     $ 14,000      $16,800 ($14,000*1.2)
Total current liabilities                               $14,000      $16,800
Long-term debt Stockholders' equity     280,000     280,000
Common stock plus
 additional paid-in capital                           15,000        15,000
Retained earnings                                      61,000      115,600
Total liabilities
 and stockholders' equity                    $ 370,000  $427,400
External Financing Required = Assets - Liabilities & equity
Assets =                    $444,000
Liabilities + Equity = $427,400
External financing      $16,600