The Pioneer Company is generating its proforma balance sheet for 2021. For the year 2020 sales were $4 million. Sales are expected to be $5 million in 2021. The company expects its net profit margin for 2021 to equal 7%. In each of the past several years, the company has been paying $100,000 in dividends to its stockholders and the company wants to pay the same amount in 2021. The 2020 Balance Sheet for Pioneer is below.

                                                 The Pioneer Company

                                     Balance Sheet as of December 31, 2020

           Cash                           $ 100,000      Accounts payable                  $ 600,000

           Accounts receivable     400,000      Notes payable                           150,000

           Inventories                  1,200,000      Long-term debt                         300,000

           Fixed assets, net            500,000      Stockholders' equity               1,150,000

                     Total assets     $2,200,000     Total liabilities & equity        $2,200,000

Assume that Cash, Accounts Receivable, Inventories, and Accounts Payable vary directly with sales. Net Fixed Assets must increase by $300,000 to support the sales expansion. Notes payable are planned to decrease by $50,000. A $70,000 long-term debt payment is required in 2021. Any additional financing that Pioneer will need for 2021 will come from new long-term debt, but Pioneer has a covenant that states that their ratio of total debt to total assets may not exceed 50%. 

How much additional financing will Pioneer need?

 Can they pay the same dividend, increase their long-term debt, and still satisfy the covenant? 

If Pioneer cannot meet the covenant, What is the minimum amount of new equity that must be used, instead of some of the new debt, to satisfy the covenant?