The Flower Crate opens and operates mega floral stores in the Hamilton, New Zealand. The idea behind the super store concept is to have larger selections at lower prices. Revenues were $1 million with net profit of $50,000 last year when the first mega Flower Crate floral outlet was opened. If the economy grows rapidly next year, Flower Crate expects its sales to growth by 50 percent. However, if the economy exhibits average growth, Flower Crate expects a sales growth of 30 percent. For a slow economic growth scenario, sales are expected to grow next year at a 10 percent rate. Management estimates the probability of each scenario occurring to be: rapid growth (.30); average growth (.50), and slow growth (.20). Flower Crate net profit margins are also expected to vary with the level of economic activity next year. If slow grow occurs, the net profit margin is expected to be 6 percent. Net profit margins of 8 percent and 14 percent are expected for average and rapid growth scenarios, respectively.

The Flower Crate, is interested in estimating its additional financing needs to support a rapid increase in sales next year. Last year revenues were $1 million, the net profit was $50,000, the investment in assets was $750,000, payables and accruals were $100,000, and equity at the end of the year was $450,000. The venture did not pay out any dividends and does not expect to pay dividends for the foreseeable future

What would be your estimate of the additional funds needed next year to support a 30 percent increase in sales?