The Case Study $($used in weekly discussions$)($paper due the last day of class$)$

Background: Meredith and James Kennedy own a business, Office Products, Inc. $($OPI$),$ which is a wholesale distributor of office equipment. Sales have grown about $5\%$ per year over the past $5$ years and are expected to grow at the same rate in the future. This past year, sales reached $$800,000.$ A computer manufacturer recently approached OPI about becoming the exclusive distributor for one of its laptop computers. Sales are projected to be $$400,000$ from this product in the $1$st year and to grow at $20\%$ for $2$ years before settling down to a $5\%$ growth rate over the longer run. It is possible, however, that sales from this product could be as high as $$800,000$ in the $1$st year. OPI has been earning a before$-$tax profit of $6\%$ of sales. Variable operating costs are expected to remain the same percentage of sales, even with the added laptop sales. Fixed operating costs would be unchanged. Meredith and James are aware that increased sales will mean they need to maintain additional inventory and accounts receivable. They will also need to purchase additional equipment. OPI currently has no debt, but it can acquire additional short$-$term financing from a bank. It could borrow up to $$50,000$ at $10\%.$ Above $$50,000,$ the interest rate would increase to $12\%.$ It is not possible to raise more equity, so any external financing would have to come from bank financing. Chapter $2$ gives general information about the financial markets. Based on this information, what parts of today's environment of financial markets would you take into consideration when giving advice to OPI in the "Case Study" Why