Yeats Corporation Is Trying to Determine Its Short-Term Cash Needs

Yeats Corporation is trying to determine its short-term cash needs. Given the following information, how much money will Yeats need to borrow next year?

•Sales in Year 9 are expected to be $500 million
•Operating margin is expected to be 8%
•Interest expense is expected to be $6 million (ignore additional interest expense generated by additional borrowings in Year 9)
•Tax rate is 40%
•Dividend payout ratio is 30%
•Increase in working capital is 5% of sales
•Increase in fixed assets is 10% of sales
•No new equity will be issued

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