In the previous problem, suppose the firm was operating at only 85 percent capacity in 2020. What is EFN now?

Data from Previous Problem

The most recent financial statements for Retro Machine, Inc., follow. Sales for 2021 are projected to grow by 20 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. If the firm is operating at full capacity and no new debt or equity is issued, what is the external financing needed to support the 20 percent growth rate in sales?

   RETRO MACHINE INC.
2020 Income Statement
Sales ...............................................................$683,520
Costs ................................................................567,240
Other expenses ...............................................17,320
Earnings before interest and taxes ...........$ 98,960
Interest paid ....................................................15,780
Taxable income ...........................................$ 83,180
Taxes (21%) .....................................................17,468
Net income ..................................................$ 65,712
Dividends .....................................................$ 22,719
Addition to retained earnings ......................42,993

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RETRO MACHINE, INC. Balance Sheet as of December 31, 2020 Assets Liabilities and Owners' Equity Current assets Current liabilities Cash $ 20,654 Accounts payable $ 55,080 Accounts receivable 29,718 Notes payable 13,776 Inventory 70,966 Total $ 68,856 Total $121,338 Long-term debt $127,000 Fixed assets Owners' equity Net plant and equipment $337,320 Common stock and paid-in surplus $105,000 Accumulated retained earnings 157,802 Total $262,802 Total assets $458,658 Total liabilities and owners' equity $458,658