5) Based on the income statement and balance sheet below for S & S Air, prepare financial statements for the next year so that the company can begin to address any outside investment requirements. a. Calculate the internal growth rate and sustainable growth rate for S & S Air, Use 2011 Data. b. S & S Air is planning for a growth rate of 12% next year. Calculate the EFN for the company, assuming the company is operating at full capacity. Further assume that costs and other expenses vary with sales as do the current assets, fixed assets, and accounts payable. All else remains constant. Can the company's sales increase at this growth rate? c. Most assets can be increased as a percentage of sales. However, faced assets must be increased in specific amounts because it is impossible, as a practical matter, to buy part of a new plant or machine. In this case, a company has a lumpy foxed cost structure. Assume S & S Air is currently producing at 100% capacity. As a result, to increase production, the company must set up an entirely new line at a cost of $5,000,000. Calculate the new EFN with this new assumption S & S AIR 2011 Income Statement Sales $ Costs $ Other Expenses $ Depreciation $ EBIT $ Interest Paid $ Taxable income $ Taxes $ Net Income Dividends Addition to Retained Earnings 36,599,300 26,669,496 4,641,000 1,640,200 3,648,604 573,200 3,075,404 1,230, 162 1,845,242 560,000 1,285,242 GAA S&S AIR 2011 Balance Sheet Current Assets Current Liabilities Cash 396,900 AP AVR $ 637 560 N/P Inventory $ 933.400 Total Total S 1.67 860 Long Term Debt Total Debt Fixed Assets Owners Equity Net Plant & Equipment_$ 15.411.620 Common R/E Total Equity $ 844 650 $ 1,928 500 $ 2.773.050 $ 5.050.000 $ 7.823.050 9 322,500 $ 9.283,930 $ 9.556 430 Total Assets $ 15,411,620 Total Liab & Equity S 17 379 480