Question $4$

Builtrite projects that its sales next year will be $$6$ million and expects to earn a net profit after taxes of $10\%.$ Builtrite is in the process of projecting its financing needs for the coming year and has come up with the following projections:

a$)$ current assets will equal $20\%$ of sales and fixed assets will remain at the current level of $$2$ million

b$)$ common equity is currently $$800,000$ and Builtrite expects to pay out half of its NPAT in dividends

c$)$ Builtrite has accounts payable equal to $15\%$ of sales and $$1,000,000$ in long$-$term debt outstanding

What are Builtrite's financing needs $($discretionary financing needs$)$ for the coming year? $$

$$600,000$

$$400,000$

$$200,000$

$$0$