Planning for Growth In August 2019, AP Clothing ventured into creating professional attire for young women. The products received rave reviews. Within three months, the retail outlets had sold over 90 percent of their inventories, quickly placing orders for more products. The founders, while excited about the prospect of sales growth, began to worry. Based on their estimates, the company would most probably experience a 50 percent growth rate in 2020, compared to the 25 percent they had experienced over the past two years. They knew that if they were to avoid cash flow problems from the anticipated growth, they needed to anticipate the asset requirements and additional financing that would be required to sustain their business. The owners believed they would need to purchase state-of-the-art industrial sewing machines, cutting tables, and pressing machines at a cost of $280,000. The new equipment would be depreciated over 14 years, using straight-line depreciation. To finance the purchase, Palmer has negotiated a line of credit (short-term debt) with Amway Bank for up to $100,000. The bank has also agreed to loan the firm $150,000 for purchasing new equipment; this is to be repaid over five years (long-term debt). The principal on the latter