Table 29.11 summarizes the 2014 income statement and end-year balance sheet of Drake's Bowling Alleys. Drake's financial manager forecasts a 10% increase in sales and costs in 2015. The ratio of sales to average assets is expected to remain at .40. Interest is forecasted at 5% of debt at the start of the year.
a. What is the implied level of assets at the end of 2015?
b. If the company pays out 50% of net income as dividends, how much cash will Drake need to raise in the capital markets in 2015?
c. If Drake is unwilling to make an equity issue, what will be the debt ratio at the end of 2015?
TABLE 29.11

Income Statement $1,000 750 25 225 90 $135 (40% of average assets (75% of sales) (5% of debt at start of year) Sales Costs Interest Pretax profit Tax Net income b (40% of pretax profit) Balance Sheet Assets $2,600 Debt Equity Total $500 2,100 $2,600 Total $2,600