The 2017 financial statements for Growth Industries are presented below. INCOME STATEMENT, 2017 Sales $ 290,000 Costs 195,000 EBIT $ 95,000 Interest expense 19,000 Taxable income $ 76,000 Taxes (at 35%) 26,600 Net income $ 49,400 Dividends $ 29,640 Addition to retained earnings 19,760 BALANCE SHEET, YEAR-END, 2017 Assets Liabilities Current assets Current liabilities Cash $ 5,000 Accounts payable $ 12,000 Accounts receivable 10,000 Total current liabilities $ 12,000 Inventories 25,000 Long-term debt 190,000 Total current assets $ 40,000 Stockholders’ equity Net plant and equipment 230,000 Common stock plus additional paid-in capital 15,000 Retained earnings 53,000 Total assets $ 270,000 Total liabilities and stockholders' equity $ 270,000 Sales and costs are projected to grow at 20% a year for at least the next 4 years. Both current assets and accounts payable are projected to rise in proportion to sales. The firm is currently operating at 75% capacity, so it plans to increase fixed assets in proportion to sales. Interest expense will equal 10% of long-term debt outstanding at the start of the year. The firm will maintain a dividend payout ratio of 0.60.