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Suppose that the 2017 actual and 2018 projected financialstatements for Cramner Corp. are initially as shown in thefollowing tables. In these tables, sales are projected to rise 35percent in the coming year, and the components of the incomestatement and balance sheet that are expected to increase at thesame 35 percent rate as sales are indicated with anitalics font. Assuming that Cramner Corp. wants to coverthe AFN with 45 percent equity, 25 percent long-term debt, and theremainder from notes payable, what amount of additional funds willthey need to raise if debt carries an 8 percent interest rate?

Income Statement
	2017 Actual			2018 Forecast
Sales	$	3,000,000		$	4,050,000
Costs except depreciation		1,000,000			1,350,000
Depreciation		1,500,000			2,025,000
EBIT	$	500,000		$	675,000
Less Interest		80,000			126,772
EBT	$	420,000		$	548,228
Taxes (40%)		168,000			219,291
Net income	$	252,000		$	328,937
Common Dividends	$	180,000		$	180,000
Addition to Retained Earnings	$	72,000		$	148,937

  

Balance Sheet
	2017 Actual			2018 Forecast
Assets
Cash	$	100,000		$	135,000
Accounts Receivable		200,000			270,000
Inventories		300,000			405,000
Total Current Assets	$	600,000		$	810,000
Net Plant and Equipment		4,000,000			5,400,000
Total Assets	$	4,600,000		$	6,210,000
Liabilities and Equity
Accounts Payable	$	100,000		$	135,000
Notes Payable		500,000			675,000
Accruals		100,000			135,000
Total Current Liabilities	$	700,000		$	945,000
Long-term bonds		500,000			675,000
Total Debt	$	1,200,000		$	1,620,000
Common Stock	$	3,000,000		$	4,050,000
Retained Earnings		400,000			540,000
Total Common Equity	$	3,400,000		$	4,590,000
Total Liabilities and Equity	$	4,600,000		$	6,210,000