The 2019 financial statements for Growth Industries are presented below. Sales and costs are projected to grow at 20% a year for at least the next 4 years. Both current assets and accounts payable are projected to rise in proportion to sales. The firm is currently operating at full capacity, so it plans to increase fixed assets in proportion to sales. Interest expense will equal 10% of long-term debt outstanding at the start of the year. The firm will maintain a dividend payout ratio of .40. Construct a spreadsheet model for Growth Industries similar to the one in Spreadsheet 18.1.

a. How much external capital will the company require in 2023?

b. What will be the company?s debt ratio at the end of 2023?

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INCOME STATEMENT, 2019 $200,000 Sales Costs 150,000 $ 50,000 EBIT Interest expense 10,000 $ 40,000 Taxable Income Taxes (at 21%) 8,400 $ 31,600 Net Income $12,640 $18,960 Dividends Addition to retalned earnings BALANCE SHEET, YEAR-END, 2019 Assets Llablitles Current assets Current llabillitles $ 3,000 $ 10,000 $ 10,000 Cash Accounts payable Accounts recelvable 8,000 Total current llabilitles 29,000 $ 40,000 Inventorles Long-term debt 100,000 Total current assets Stockholders' equlty Net plant and equlpment 160,000 Common stock plus additional pald-In capital 15,000 Retalned earnings 75,000 Total llablitles plus stockholders' equlty Total assets $200,000 $200,000