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Item 1 7.33 points

The 2019 financial statements for Growth Industries are presented below.

INCOME STATEMENT, 2019Sales$340,000Costs220,000EBIT$120,000Interest expense24,000Taxable income$96,000Taxes (at 21%)20,160Net income$75,840Dividends$22,752Addition to retained earnings$53,088

BALANCE SHEET, YEAR-END, 2019AssetsLiabilitiesCurrent assetsCurrent liabilitiesCash$3,000Accounts payable$10,000Accounts receivable8,000Total current liabilities$10,000Inventories29,000Long-term debt240,000Total current assets$40,000Stockholders' equityNet plant and equipment280,000Common stock plus additional paid-in capital15,000Retained earnings55,000Total assets$320,000Total liabilities plus stockholders' equity$320,000

Sales and costs are projected to grow at 40% 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 70% 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 0.30.

What is the required external financing over the next year?(Enter excess cash as a negative number with a minus sign.)