Sephora is planning to implement a warehouse to house all the cosmetics. Included will be building of a manufacturing facility that will cost $400,000 in 2014 and is expted to lower the company's variable cost per foundation.

How would you recommend Sephora raise the required financing?

What options might be available if the company wanted to explore all opportunities other than using the line of credit?

Key Projected Data (2014)

Data	Value
Sales	Increase to $6,500,000
COGS	Remain the same % of sales
Selling Expense	Increase by 22%
General and Admin Expenses	Increase by 37.5%
Accumulated Amortization	Increase to $685,000
Interest Expense	Increase to $97,000
Tax Rate	40%
Divident Payments	$20,000
Average age of inventory	56 days
Average collection period	52 days
Average payment period	26 days
Accruals	Increase to $96,000
Long-term debt, preferred shares, and common shares	Remain the same

Income Statement, Dec. 31, 2013

Balance Sheet, December 31, 2013

Sales revenue Less: Cost of goods sold Gross margin Less: Operating expenses Selling expense General and administrative expenses Amortization Expense Total operating expense Operating Earnings (EBIT) Less: Interest expense Earnings before taxes Less: Taxes (rate 40%) Net income after taxes $5,075,000 3,704,000 1,371,000 $650,000 416,000 152,000 1.218.000 153,000 93,000 60,000 24.000 $36,000