Major Manuscripts, Inc., is currently operating at 70 percent of capacity. All costs and net working capital vary directly with sales. The tax rate, the profit margin, and the dividend payout ratio will remain constant. How much additional debt is required if no new equity is raised and sales are projected to increase by 10 percent?

a. $345

b. $161

c. $555

d. $184

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MC Qu. 4-A11 Major Manuscripts, Inc. is currently operating at ... Major Manuscripts, Inc. 2012 Income Statement Net sales Cost of goods sold Depreciation Earnings before interest and taxes Interest paid Taxable Income Taxes Net Income Dividends Cash Accounts rec. Inventory Total Net fixed assets Total assets $ 7.700 6.800 220 680 870 2,350 $ 5,550 3.310 8.860 S S5 61 619 235 384 193 Major Manuscripts, Inc. 2012 Balance Sheet 2012 $2,330 Accounts payable Long-term debt Common stock Retained earnings Total liabilities & equity 2012 $ 1.610 360 $ 2,400 4,490 8.860 MC Qu. 4-A11 Major Manuscripts, Inc. is currently operating at ... Major Manuscripts, Inc. 2012 Income Statement Net sales Cost of goods sold Depreciation Earnings before interest and taxes Interest paid Taxable Income Taxes Net Income Dividends Cash Accounts rec. Inventory Total Net fixed assets Total assets $ 7.700 6.800 220 680 870 2,350 $ 5,550 3.310 8.860 S S5 61 619 235 384 193 Major Manuscripts, Inc. 2012 Balance Sheet 2012 $2,330 Accounts payable Long-term debt Common stock Retained earnings Total liabilities & equity 2012 $ 1.610 360 $ 2,400 4,490 8.860

Answer rating: 100% (QA)

It is to be noted that if the assets were not at full capacity onl... View the full answer