Doors Down maintains a constant 50 percent dividend payout ratio. 1 answer below »

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EFN The most recent financial statements for 2 Doors Down, Inc., are shown here:

Income Statement

Balance Sheet

Sales

$3,100

Assets

$4,000

Current liabilities

$ 750

Costs

2,600

Fixed

3,000

Long-term debt

1,250

Taxable income

$ 500

Total

$7,000

Equity

5,000

Taxes (34%)

170

Total

$7,000

Net income

$ 330

Assets, costs, and current liabilities are proportional to sales. Long-term debt and equity are not. 2 Doors Down maintains a constant 50 percent dividend payout ratio. Like every other firm in its industry, next year’s sales are projected to increase by exactly 16%. What is the external financing needed?

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