Following are the income statement and balance sheet for Sandar Co.

Income Statement 

Sales 60,000 

Costs 40,000 

Taxable income 20,000 

Taxes (34%) 6,800 

Net income 13,200

Dividends 5,280 

Addition to Retained Earnings 7,920

Balance Sheet 

Current Assets Current liabilities 

Cash 6,100 Accounts Payable 2,600 

Accounts receivables 13,800 Notes Payable 13,600 

Inventory 15,200 Total 16200 

Total 35,100 Long Term Debt 50,000 

Fixed assets Owners’ Equity  

Net plant and equipment 69,000 Common stock 30,000 

Retained Earnings 7,900 

Total assets 104,100 Total Liabilities and Owners’ Equity 104,100

A. Prepare a pro forma income statement and pro forma balance sheet, and calculate the EFN, on the basis of the following assumptions: 

1. 25% growth in Sales, 

2. Accounts payable vary with sales whereas all other liabilities remain unchanged. 

3. There are no new common stocks issued. 

4. The payout ratio is constant throughout the years.

B. Calculate the following: 

1. Internal rate of growth. 

2. Sustainable rate of growth.