Wolf Den Craft Beers Projects That It Will Need $50

Multiple Choice

Wolf Den Craft Beers projects that it will need $50 million in total assets to meet the sales projection of $65 million. The pro forma balance sheet shows accounts payable, $8 million, accrued expenses, $2 million, long-term debt, $10 million and equity, $25 million. If Wolf Den decides to meet discretionary financing needs with 5 year notes payable, how much will it need to borrow?

A) $10 million
B) $0, the firm will have excess funds
C) $5 million.
D) Cannot be calculated without knowing the net profit margin.