Arleen Food Products projects its sales next year to be $6 million. The firm is currently in the process of projecting its financing needs and has made the following assumptions and projections:

Operating profit margin is 30% of sales

Operating expenses are 25% of sales

Interest expense is $100 thousand

Tax rate is 35%

Current assets are 25% of sales

Fixed assets are 5% of sales

Accounts payables are 10% of sales

There is no long-term debt

Equity is equal to $1 million

Future borrowing rate is Prime Rate + 200 basis points.

-What are Arleen Food Products financing needs for next year?

-Discuss the options available to the firm to generate the additional funds necessary. How might each of these options affect firm value?