Problem

EFN [LO2] The most recent financial statements for GPS. Inc., are shown here:Income Statem...

EFN [LO2] The most recent financial statements for GPS. Inc., are shown here:

Income Statement

 

 

Balance Sheet

 

Sales

$ 19,500

Assets

$ 98,000

Delis

$ 52,500

Costs

15,000

 

 

Equity

45,500

Taxable income

$ 4,500

Total

$ 98,000

Total

$ 98,000

Taxes (40%)

1,800

 

 

 

 

Net income

$ 2,700

 

 

 

 

Assets and costs are proportional to sales. Debt and equity are not. A dividend of $1,400 was paid, and the company wishes to maintain a constant payout ratio. Next year’s sales are projected to be $21,840. What is the external financing needed?

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