Piedmont Products Inc. (PPI) has current sales of $60 million. Sales are expected to grow to $80 million next year. PPI currently has accounts receivable of $9 million, inventories of $15 million, and net fixed assets of $21 million. These assets are expected to grow at the same rate as sales over the next year. Accounts payable are expected to increase from their current level of $15 million to a new level of $19 million next year. PPI wants to increase its cash balance at the end of next year by $3 million over its current cash balance. Earnings after taxes next year are forecasted to be $12 million. PPI plans to pay a $2 million dividend.

PPI’s marginal tax rate is 40 percent.

How much external financing is required by PPI next year? P715