In the spring of 2016, the Caswell Publishing Company established a custom publishing business for its business clients. These clients consisted principally of small- to medium-size companies in Round Rock, Texas. However, the company's plans were disrupted when it landed a large printing contract from Dell Inc., which it expects will run for several years. Specifically, the new contract will increase firm revenues by 100 percent. Consequently, Caswell's managers know they will need to make some significant changes in firm capacity-and quickly. The following balance sheet for 2016 and pro forma balance sheet for 2017 reflect the firm's estimates of the financial impact of the 100 percent revenue growth:

a. How much new discretionary financing will Caswell require based on the above estimates?
b. Given the nature of the new contract and the specific needs for financing that the firm expects, what recommendations might you offer to the firm's CFO as to specific sources of financing the firm should seek to fulfill its DFN?

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Caswell Publishing, Inc Balance Sheet, 2016 Caswell Publishing, Inc. Pro Forma Balance Sheet, 2017 (100% sales growth) Current assets $8,000,000 Current assets Net fixed assets Total assets Liabilities and owners' equity $16,000,000 36,000,000 $60,000,000 22,000,000 Net fixed assets $30,000,000 Total assets Liabilities and owners" equity Accounts payable Accrued expenses Notes payable 1,000,000 A 3,000,000 1,500,000 $5,500,000 6,500,000 Accounts payable Accrued expenses Notes payable S 2,000,000 $ 6,000,000 1,500,000 $9,500,000 6,500,000 $16,000,000 $1,000,000 2,000,000 15,000,000 $18.000,000 $34,000,000 Total current liabilities Total current liabilities Long-term debt Long-term debt Total liabilities $12,000,000 Total liabilities s 1,000,000 Common stock (par) Common stock (par) Paid-in capital Retained earnings 2,000,000 15,000,000 $18,000,000 $30,000,000 Paid-in capital Retained earnings Total common equity Projected sources of financing Discretionary financing needs Total financing needs - Total common equity Total liabilities and owners' equity Tota l assets