Assume that net working capital and all of the costs of Fake Stone, Inc. increase directly with sales. Also assume that the tax rate and the dividend payout ratio are constant. The firm is currently operating at full capacity. What is the external financing need if sales increase by 4 percent?

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Projected total assets = $25,460 F1F1F1S1F1F1F10 1.04 = $26,478.40Projected accounts payable = $2,470 F1F1F1S1F1F1F10 1.04 = $2,568.80Projected retained earnings = $4,190 + [($3,420 - $1,368) F1F1F1S1F1F1F10 1.04] = $6,324.08External financing need = $26,478.40 - $2,568.80 - $8,800 - $10,000 - $6,324.08 = -$1,214.48

Assume That Net Working Capital and All of the Costs