How much new long-term debt financing will esthers need


Esther's Egg Farm is constructing its pro forma financial statements for this year. At year end, assets were $500,000 and accounts Payable were $125,000, Notes payable $100,000. Long-Term Debt is $37,000. Last year's sales were $750,000. Esther's expects to grow by 15% this year. Assets and Accounts Payable are expected to grow proportionally to sales. Common stock currently equals $140,000, and retain earnings are $98,000. Esther's plans to sell $25,000 of new common stock this year. The firm's profit margin on sales is 3%, and 30% of the earnings will be payout as dividends. How much new long-term debt financing will Esther's need this year to finance it's expected growth? Esther's currently opearting at full capacity.

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