Here are the abbreviated financial statements for Planners Peanuts: INCOME STATE

Question

Here are the abbreviated financial statements for Planners   Peanuts:



























INCOME   STATEMENT, 2012













  Sales $6,500














  Cost $5,100































  Net income $1,400
















































BALANCE   SHEET, YEAR-END














2011 2012
2011 2012










  Assets $10,500 11,000          Debt 633 $1,000













         Equity 9,867 $10,000












































  Total $10,500 11,000    
          Total 10,500 11,000





























































If the   dividend payout ratio is fixed at 50%, calculate the required total external   financing for growth rates in 2013 of 15%, 20%, and 25%.
(Do not round   intermediate calculations. Round your answers to 2 decimal places.)

































External   Financing     














15% $___________   















20% $___________














25% $___________































Here are the abbreviated financial statements for Planners   Peanuts:



























INCOME   STATEMENT, 2012













  Sales $6,500














  Cost $5,100































  Net income $1,400
















































BALANCE   SHEET, YEAR-END














2011 2012
2011 2012










  Assets $10,500 11,000          Debt 633 $1,000













         Equity 9,867 $10,000












































  Total $10,500 11,000    
          Total 10,500 11,000





























































If the   dividend payout ratio is fixed at 50%, calculate the required total external   financing for growth rates in 2013 of 15%, 20%, and 25%.
(Do not round   intermediate calculations. Round your answers to 2 decimal places.)

































External   Financing     














15% $___________   















20% $___________














25% $___________

Explanation / Answer

Hi,

Plese find the answer as follows;

Step 1:Growth in Assets = Total Asset Value in 2012*Growth Rate

Growth in Assets (15%) = 11000*.15 = 1650

Growth in Assets (20%) = 11000*.20 = 2200

Growth in Assets (25%) = 11000*.25 = 2750

Step 2: Net Income = 1400*(1+growth rate)

Net Income (15%) = 1400*(1+.15) = 1610

Net Income (20%) = 1400*(1+.20) = 1680

Net Income (25%) = 1400*(1+.25) = 1750

Step 3: Retained Earnings = Net Income*.50

Retained Earnings (15%) = 1610*.50 = 805

Retained Earnings (20%) = 1680*.50 = 840

Retained Earnings (25%) = 1750*.50 = 875

Step 4: External Financing = Growth in Assets - Retained Earnings

External Financing (15%) = 1650 - 805 = 845

External Financing (20%) = 2200 - 840 = 1360

External Financing (25%) = 2750 - 875 = 1875

Thanks.

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