Question

The most recent financial statements for Summer Tyme, Inc., are shown here:

Income Statement		Balance Sheet
Sales	$4,000	Current assets	$5,300	Current liabilities	$790
Costs	1,800	Fixed assets	6,000	Long-term debt	3,570
Taxable income	$2,200			Equity	6,940
Taxes (34%)	748	Total	$11,300	Total	$11,300
Net income	$1,452

Assets, costs, and current liabilities are proportional to sales. Long-term debt and equity are not. The company maintains a constant 40 percent dividend payout ratio. As with every other firm in its industry, next year's sales are projected to increase by exactly 25 percent.

Required:

What is the external financing needed? (Do not round your intermediate calculations.)

Multiple Choice

• $1,588.5

• $892.5

• $1,538.5

• $1,736

• $1,488.5

Answer 1

EXCEL FORMULA:

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