Reference no: EM131821444

Owen’s Electronics has 9 operating plants in seven southwestern states. Sales for last year were $100 million, and the balance sheet at year-end is similar in percentage of sales to that of previous years (and this will continue in the future). All assets (including fixed assets) and current liabilities will vary directly with sales. The firm is working at full capacity.

Balance Sheet         (in $ millions)

Assets

Liabilities and Stockholders' Equity

  Cash                                             $11           Accounts payable                               $16

  Accounts receivable                    $25             Accrued wages                                   $8

  Inventory                                     $28             Accrued taxes                                    $10

Current assets                                $64             Current liabilities                              $34

  Fixed assets                                 $46              Notes payable                                   $12

                                                                          Common stock                                  $18

                                                                          Retained earnings                              $46

  Total assets                                 $110            Total liabilities & stockholders' equity     $110

Owen’s has an aftertax profit margin of 10 percent and a dividend payout ratio of 60 percent.

If sales grow by 25 percent next year, determine how many dollars of new funds are needed to finance the growth. (Do not round intermediate calculations. Enter your answer in dollars not in millions. Omit the "$" sign in your response.)