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Suppose that Wall-E Corp. currently has the balance sheet shown below, and that sales for the year just ended were $6.5 million. The firm also

Suppose that Wall-E Corp. currently has the balance sheet shown below, and that sales for the year just ended were $6.5 million. The firm also has a profit margin of 25 percent, a retention ratio of 30 percent, and expects sales of $8.5 million next year. Fixed assets are currently fully utilized, and the nature of Wall-Es fixed assets is such that they must be added in $1 million increments.

Assets Liabilities and Equity
Current assets $ 1,625,000 Current liabilities $ 2,080,000
Fixed assets 4,225,000 Long-term debt 1,750,000
Equity 2,020,000
Total assets $ 5,850,000 Total liabilities and equity $ 5,850,000

If current assets and current liabilities are expected to grow with sales, what amount of additional funds will Wall-E need from external sources to fund the expected growth?

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