Peabody & Peabody has 2012 sales of $10 million. It wishes to analyze expected performance and financing needs for 20153 years ahead. Given the following information, respond to parts a and b. (1) The percent of sales for items that vary directly with sales are as follows: Accounts receivable, 14% Inventory, 16% Accounts payable, 15% Net profit margin, 4% (2) Marketable securities are expected to increase by fifty percent. Other current liabilities are expected to remain unchanged. (3) A minimum cash balance of $490,000 is desired. (4) A new machine costing $550,000 will be acquired in 2013, and equipment costing $850,000 will be purchased in 2014. Total depreciation in 2013 is forecast as $250,000, and in 2014 $350,000 of depreciation will be taken. An old machine having book value of $50,000 will be disposed of in 2015. (5) Accruals are expected to rise to $600,000 by the end of 2015. (6) No sale or retirement of long-term debt is expected. (7) No sale or repurchase of common stock is expected. (8) The dividend payout of 40% of net profits is expected to continue. (9) Sales are expected to be $12 million in 2013, $13 million in 2014 and $14 million in 2015. (10) The December 31, 2012, balance sheet follows. a. Prepare a pro forma balance sheet dated December 31, 2015. b. Discuss the financing changes suggested by the statement prepared in part a and what does positive or negative value mean for External Financing Required.