Beta Corporation is making plans for the next fiscal year. Beta’s current sales are $3.5 million, expected to increase to $5 million, based on current assets of $2.4 million and fixed assets of $2.5 million. In the following year Beta decided to increase fixed assets by $0.5 million, current assets and accounts payable vary with direct proportion of sales. Currently, the company has accounts payable of $620,000; its long-term debt is $0.5 million (due in 3 years), common equity is $1 million and retained earnings are $0.25 million. The net profit margin for Beta is 5 percent and the company plans to pay $0.25 million as dividends.

a. Calculate Beta company’s financial needs for the next year.

b. Calculate Beta company’s discretionary financing needs.

c. Estimate the sales amount in which Beta will not need additional funding, that is, where discretionary financing needs (DFN) is 0.