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The balance sheet and income statement of the Grow 'n' Glow Manufacturing Company during the past year are as follows (000 omitted):  The company paid dividends during the past year of $975. During the past year, fixed assets were being used at 85% of capacity. In all other respects, the company was operating at full capacity.The company's dividend policy is that dividends will grow at a rate of 4% per year. The past year's interest rate on debt was 5% on short-term debt and 7% on long-term debt. The held-to-maturity securities earn 4% return and are not expected to change next year. Sales for next year are projected to increase at the rate of 15%. Using the Forecasted Financial Statement approach, how much additional financing will the company need next year? For the interest expense calculations, use the beginning balance of outstanding loans and an interest rate that is 0.5% higher than the past year's interest rates. (Hint: Since the company is operating at 100% of capacity in all respects except for fixed assets, and since held-to-maturity securities are not expected to change, all incomes and expenses and all assets except for held-to-maturity securities and fixed assets will increase by the same amount for the next year. To determine whether fixed assets will increase and if so, by how much, determine how much sales could increase without requiring additional fixed asset purchases and then compare that with forecasted sales for next year.)
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