Super Fun Toys Inc. will need to raise $535,000 from external sources to fund the expected growth. This can be calculated using the sustainable growth rate formula: Sustainable Growth Rate = Profit Margin x Retention Rate Sustainable Growth Rate = 16% x 28% Sustainable Growth Rate = 4.48% This means that Super Fun Toys Inc. can grow their sales by 4.48% using only their retained earnings. To achieve the expected sales of $9.8 million, they would need to raise additional funds from external sources. The additional funds needed can be calculated using the following formula: Additional Funds Needed = (Assets/Sales) x (Expected Sales - Current Sales) Additional Funds Needed = (($8,600,000/$8,900,000) x ($9,800,000 - $8,900,000)) Additional Funds Needed = ($0.966 x $900,000) Additional Funds Needed = $869,400 However, since all assets and current liabilities are expected to grow with sales, the calculation should be adjusted to reflect this. Thus: New Assets = (Assets/Sales) x Expected Sales New Assets = ($8,600,000/$8,900,000) x $9,800,000 New Assets = $9,504,494 New Current Liabilities = (Current Liabilities/Sales) x Expected Sales New Current Liabilities = ($2,400,000/$8,900,000) x $9,800,000 New Current Liabilities = $2,643,581 Adjusted Additional Funds Needed = New Assets - (Current Liabilities + Equity) Adjusted Additional Funds Needed = $9,504,494 - ($2,643,581 + $4,500,000) Adjusted Additional Funds Needed = $2,360,913 Therefore, Super Fun Toys Inc. will need to raise $2,360,913 from external sources to fund the expected growth, which is $1,491,513 more than the initial calculation.