In the previous problem, suppose the firm was operating at only 80 percent capacity in 2021. What is EFN now?

Data in previous problem,

The most recent financial statements for Crosby, Inc., follow. Sales for 2022 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 external financing is needed to support the 20 percent growth rate in sales?

Transcribed Image Text:

Sales Costs CROSBY, INC. 2021 Income Statement Other expenses Earnings before interest and taxes Interest expense Taxable income Taxes (21%) Net income Dividends Addition to retained earnings $27,475 56,265 $686,530 554,420 14,020 $ 118,090 12,090 $106,000 22,260 $ 83,740