1) At year-end 2013, Wallace Landscaping’s total assets were= $1.8 million and its accounts payable were= $350,000. Sales, which in 2013 were= $2.5 million, are expected to rise by 20% in 2014. Total assets and accounts payable are proportional to sales, and relationship will be sustained. Wallace typically utilizes no current liabilities other than accounts payable. Common stock amounted to $495,000 in 2013, and retained earnings were= $300,000. Wallace has arranged to sell= $105,000 of new common stock in 2014 to meet some of its financing requirements. Remainder of its financing needs will be met by issuing new long-term debt at the end of 2014. (As the debt is added at the ending of year, there will be no extra interest expense due to new debt.) Its profit margin on sales is 7%, and 40% of earnings will be paid out as dividends.

i) Compute Wallace's total long-term debt in 2013?

ii) Compute Wallace's total liabilities in 2013?

iii) How much new long-term debt financing will be needed in 2014? (Hint: AFN - New stock = New long-term debt.)