Table 29.12 summarizes the 2017 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 2018. 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 2018?
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 2018?
c. If Drake is unwilling to make an equity issue, what will be the debt ratio at the end of 2018?

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