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Eagle Sports Supply has the following financial statements. Assume that Eagle’s assets are proportional to its...

Eagle Sports Supply has the following financial statements. Assume that Eagle’s assets are proportional to its sales.

INCOME STATEMENT, 2019
Sales $ 1,100
Costs 210
Interest 90
Taxes 160
Net income $ 640

BALANCE SHEET, YEAR-END
2018 2019 2018 2019
Assets $ 3,100 $ 3,400 Debt $ 1,300 $ 1,400
Equity 1,800 2,000
Total $ 3,100 $ 3,400 Total $ 3,100 $ 3,400

  

a. Find Eagle’s required external funds if it maintains a dividend payout ratio of 60% and plans a growth rate of 20% in 2020. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

b. If Eagle chooses not to issue new shares of stock, what variable must be the balancing item?

c. What will be the value of this balancing item? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

d. Now suppose that the firm plans instead to increase long-term debt only to $1,500 and does not wish to issue any new shares of stock. What is now the balancing item?

e. What will be the value of this new balancing item? (Do not round intermediate calculations. Round your answer to the nearest whole number.)

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