Assume Costs, Accounts Payable, and Current Assets All Increase at the Same

Multiple Choice

Assume costs, accounts payable, and current assets all increase at the same rate as sales. Also assume 80% of net income is paid out in dividends and that the firm is currently operating at 90% of capacity. If sales grow at 25%, compute external financing needed.

A) $0.00
B) $4.50
C) $22.50
D) $29.50
E) $52.00