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The firm is considering a capital expenditure of $20,000 at the end of 2019 in order to sustain future sales growth over the long term. The firm will raise capital through a combination of debt and equity issuance. When raising capital the firm will rebalance to a Long-Term Debt/Equity ratio of .8. The balance in Cash and Marketable Securities must not fall below 3% of Sales.

Determine how much new Long-Term Debt and Equity must be issued and provide a complete breakdown of all specific sources used to pay for the $20,000 expenditure.

Long-Term Debt Issue:

Equity Issue:

Breakdown of the remaining sources of the $20,000: :

Actual FY 2018 Fest FY 2019 INCOME STATEMENT Net Sales Operating cost SGA Depreciation EBIT Interest Income Interest Expense EBT Taxes Net Income $ 84,929.8 $ 103,6823 $ 75,810.4 S 95,387.7 $ 3,400.0 S 4,000.0 $ 738.1 S 677.5 $ 4,983.3 S 3,617.0 S 34.9 S 109.0 S 976.6 S 998.5 $ 4,041.6 $ 2727.6 $ 1.414.6 S 954.7 $ 2,627.0 S 1,7729 Dividends Additions to Retained Earnings $ 525.4 s $ 2, 101.6 S 354.8 1,418.3 BALANCE SHEET ASSETS Current Assets Cash Marketable Securities Cash & Mkt Securities Inventories Accounts Receivable Other Current Total Current Assets Net Fixed Assets TOTAL ASSETS $ 3,586.3 4.147.3 S 107.3 S 1.855.5 $ 3,673.7 $ 6,002.8 $ 7.878.7 S 9,331.4 $ 6,349.5 S 5.184.1 $ 5,349.5 5 5,702.5 $ 21,505.3 S 26,220.8 $ 14,263.9 $ 12.873.2 $ 37.515.3 $ 39,094.0 LIABILITIES & EQUITY Current Liabilities Accounts Payable Short-term Notes Total Current Liabilities Long-term Debt Equity TOTAL LIABILITIES AND EQUITY S 6.241.1 $ 6.220.9 $ 1.426.5 S 1,607.1 $ 7.687.6 $ 7.828.0 $ 13,000.0 S 13,000.0 $ 16,847.7 $ 18,208.0 $ 37,515.3 39,094.0 Ratio Analysis Debt Ratios Long-term-debt/Equity ST-Notes/Long-tem-debt Total Current Liabilities/Long-term Debt 0.861 0.110 0.590 0.712 0.124 0.602 Other Ratios Cash & Mkt Securities/Annual Sales 0.043 0.058