ABC Textile 2011 financial statements are shown below:

ABC textile
Balance Sheet as of December 31,2001
(Thousands of Dollars)
Cash	..		Accounts Payable
Receivables	6,480		Accruals
Inventories	9,000		Notes Payable	2,100
Total current assets	.		Total current liabilities	9,300
Net fixed assets	..		Mortgage bonds	..
			Common stocks	3,500
			Retained earnings	12,860
Total Assets	..		Total liabilities & equity	29,160

ABC textile
Income Statement for December 31, 2001
(Thousands of Dollars)
Sales		36,000
Operating cost		..
Earnings before interest and taxes		..
Interest		560
Earnings before taxes		.
Taxes		..
Net Income		..
Dividends		810
Addition to retained earning s		..

1. Complete the financial statements considering the following points:

• Current assets are 56.790% of total assets.
• Accruals are 30.96% of total current liabilities.
• Operating cost is 90.111% of sales.
• Taxes are 40%
• Payout ratio is 45%.

2. Suppose 2002 sales are projected to increase by 15% over 2011. Determine the additional funds needed. Assume that the company was operating at full capacity in 2011, that it cannot sell off any of its fixed assets, and that any required financing will be borrowed as notes payable. Also, assume that assets, spontaneous liabilities and operating cost are expected to increase by the same percentage as sales. Use the percent of sales method to develop a pro forma balance sheet and income statement for December 31,2002. (Do not incorporate any financing feed back affects. Use the pro forma income statement to determine the addition to retained earnings.)
3. Use the financial statements developed in part b to incorporate the financing feedback as a result of addition to notes payable. For the purpose of this part, assume that the notes payable interest rate is 10%. What is the AFN for this iteration?