Sambonoza Enterprises projects its sales next year to be ?$8 million and expects to earn 7 percent of that amount after taxes. The firm is currently in the process of projecting its financing needs and has made the following assumptions? (projections):
1. Current assets will equal 20 percent of? sales, and fixed assets will remain at their current level of ?$1 million.
2. Common equity is currently $0.80 ?million, and the firm pays out half of its? after-tax earnings in dividends.
3. The firm has? short-term payables and trade credit that normally equal 10 percent of? sales, and it has no? long-term debt outstanding.
What are? Sambonoza's financing needs for the coming? year?