Assets and costs are proportional to sales

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INCOME STATEMENT

Sales $50,000

Costs 38,000

Taxable Income $12,000

Taxes (34%) 4,080

Net Income $7,920

BALANCE SHEET

Current Assets $24,000

Fixed Assets $91,000

Total $115,000

Long-term Debt $54,500

Equity $60,500

Total $115,000

Assets and costs are proportional to sales. The company maintains a constant 40 percent dividend payout ratio and a constant debt-equity ratio.

What is the maximum increase in sales that can be sustained assuming no new equity is issued? (Do not round intermediate calculations and round your final answer to 2 decimal places (e.g., 32.16).)

Reference no: EM13768128

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