(Financial forecasting) Zapatera Enterprises is evaluating its financing requirements for the coming year. The firm has been in business for only 1-year, but its CFO predicts that the firm's operating expenses, current assets, net fixed assets, and current liabilities will remain at their current proportion of sales. Last year Zapatera had $12 million in sales, and net income of $1.2 million. The firm anticipates that next year's sales will reach $15.0 million, with net income rising to $1.32 million. Given its present high rate of growth, the firm retains all its earnings to help defray the cost of new investments. The firm's balance sheet for 2013 is as shown below.

A. What are Zapatera's financing requirements (that is, total assets) for 2014? I already know that A rounded to the nearest dollar is $12,750,000 . Im stuck on B of this problem.

B. What are Zapatera's discretionary financing needs (DFN) for 2014? _______ (rounded to nearest $). I arrived at $1,800,000 but my amount is not correct. What is the correct amount for Zapatera's DFN for 2014 ( rounded to nearest $) ? In my calculations I came up with a 2014 Accounts payable of, ($15 million * .25 = $3,750,000), perhaps I missed something in that calculation ?

BALANCE SHEET

12/31/2013 % OF SALES

Current assets $3, 000,000 25%

Net fixed assets 7,200,000 60%

Total $10,200,000

LIABILITIES AND OWNER'S EQUITY

Accounts payable $3,000,000 25%

Long-term debt 1,400,000 NA^a

Total liabilities $4,400,000

Common stock 1,000,000 NA

Paid-in capital 3,600,000 NA

Retained earnings 1,200,000

Common equity 5,800,000

Total $ 10,200,000

^a Not applicable. This figure does not vary directly with sales and is assumed to remain constant

for purposes of making next year's forecast of financing requirements