Redo Problem 23 using sales growth rates of 30 and 35 percent in addition to 20 percent. Assume the company wishes to keep its debt-equity ratio constant. Illustrate graphically the relationship between EFN and the growth rate and use this graph to determine the relationship between them.

Data from 23

Data from previous problem

The most recent financial statements for Scott, Inc., appear below. Sales for 2020 are projected to grow by 20 percent. Interest expense will remain constant; the tax rate and the dividend payout rate also will 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?

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SCOTT, INC. 2019 Income Statement Sales $891,600 727,900 Costs Other expenses Earnings before interest and 18.240 $145,460 taxes Interest expense 13.400 Taxable income $132,060 Taxes (22%) 29.053 Net income $103,007 Dividends $36,224 Addition to retained earnings 66,783 SCOTT, INC. Balance Sheet as of December 31, 2019 Liabilities and Owners' Equity Assets Current liabilities Current assets $ 65,200 Cash $24,280 Accounts payable Accounts Notes payable receivable 37,070 16.320 $ 81,520 $155,000 83.400 Total Inventory $144,750 Long-term debt Total Owners' equity Fixed assets Common stock and paid-in $130,000 Net plant and equipment $396.500 surplus Retained earnings $304.730 Total 174.730 Total assets $541,250 $541,250 Total liabilities and owners' equity