Next year's sales for Cumberland Mfg. are expected to be

$19.55

million. Current sales are

$17

million, based on current assets of

$5.67

million and fixed assets of

$8.50

million. The firm's net profit margin is

5

percent after taxes. Cumberland estimates that its current assets will rise in direct proportion to the increase in sales, but that its fixed assets will increase by only $200,000. Currently, Cumberland has

$1.50

million in accounts payable (which vary directly with sales),

$2

million in long-term debt (due in 10 years), and common equity (including

$3

million in retained earnings) totaling

$10.67

million. Cumberland plans to pay

$0.20

million in common stock dividends next year.