The financial statements of Isabella Painting Supply are shown in the table below. For simplicity, “Costs”...

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Finance

The financial statements of Isabella Painting Supply are shownin the table below. For simplicity, “Costs” include interest.Assume that Isabella’s assets are proportional to its sales.
Income Statement
Sales
$
3,950
Costs
1,750
Pretax income
$
2,200
Taxes (at 40.0%)
880
Net income
$
1,320
Balance Sheet, Year-End
2019
2018
2019
2018
Net assets
$
6,000
$
5,700
Debt
$
2,500
$
2,400
Equity
3,500
3,300
Total
$
6,000
$
5,700
Total
$
6,000
$
5,700
a. Find Isabella’s required external funds ifit maintains a dividend payout ratio of 50% and plans a growth rateof 35% in revenue, expenses, and assets in 2020. Assume the taxrate remains constant.
b. If Isabella Painting Supply chooses not toissue new shares of stock, what is the value of debt in 2020?
c. Suppose that the firm plans instead toincrease long-term debt only to $3,350 and does not wish to issueany new shares of stock. What must be the 2020 dividend paymentnow?

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The financial statements of Isabella Painting Supply are shownin the table below. For simplicity, “Costs” include interest.Assume that Isabella’s assets are proportional to its sales.Income StatementSales$3,950Costs1,750Pretax income$2,200Taxes (at 40.0%)880Net income$1,320Balance Sheet, Year-End2019201820192018Net assets$6,000$5,700Debt$2,500$2,400Equity3,5003,300Total$6,000$5,700Total$6,000$5,700a. Find Isabella’s required external funds ifit maintains a dividend payout ratio of 50% and plans a growth rateof 35% in revenue, expenses, and assets in 2020. Assume the taxrate remains constant. b. If Isabella Painting Supply chooses not toissue new shares of stock, what is the value of debt in 2020?c. Suppose that the firm plans instead toincrease long-term debt only to $3,350 and does not wish to issueany new shares of stock. What must be the 2020 dividend paymentnow?

Income Statement
Sales	$	3,950
Costs		1,750
Pretax income	$	2,200
Taxes (at 40.0%)		880
Net income	$	1,320

Balance Sheet, Year-End
	2019		2018			2019		2018
Net assets	$	6,000	$	5,700	Debt	$	2,500	$	2,400
					Equity		3,500		3,300
Total	$	6,000	$	5,700	Total	$	6,000	$	5,700