Timothy projects its next sales next year to be $4 million and expects to earn 5 % of that amount in taxes. The firm is currently projecting its financial needs based on the following projections: (10)

1.Current assets will equal 20 % of sales and fixed assets will remain at their current level of $ 1 million.

2.Common equity is currently .8 million $ and the firm pays out half its earning in dividends.

The firm had short term payables and trade

3.credit that normally equal 10 % of sales and it has no long-term debt outstanding.