Fishing Charter Inc. estimates that it invests $ 0.30 in assets for each dollar of new sales. However, $ 0.05 in profits are produced by each dollar of additional sales, of which $ 0.01 can be reinvested in the firm. If sales rise by $ 500,000 next year from their current level of $ 5 million, and the ratio of spontaneous liabilities to sales is 15 percent, what will be the firm’s need for discretionary financing?
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