Sambonoza Enterprises projects its sales next year to be $ 4 million and expects to earn 5 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 $ 0.8 million, and the firm pays out half 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?