The Additional Funding Needed (AFN) formula develops a conceptual basis for estimating external funding requirements for a start-up company. Because of its objective nature, the formula often must be customized and adapted to address industry or company specific fact patterns. The following pro forma Balance Sheet reflects projected company status AFTER its first year of operation:

Cash* 25,000 Payables* 35,000

Receivables* 125,000 Accruals* 20,000

Inventories* 300,000 Total CL 55,000

Total CA 450,000

Convertible LT Debt 200,000

Net Fixed Assets 500,000 Common Stock 825,000 Retained Earnings (130,000)

Total Assets 950,000 Total Debt & Equity 950,000

*Accounts which vary linearly with Sales

The first year (Year 1) projected sales which the asset structure above is expected to support is $1,900,000; and LOSSES for the companys pre-revenue period were $35,000 and are included in the projected Retained Earnings balance abovethe rest of the balance is from the projected Income Statement). What is the expected NET LOSS percentage (%) for Year 1? (1 point)