2. value 2.00 points Problem 3-5 Sales and Growth The most recent financial statements for Wise Co. are shown here: Income Statement Sales $ 38,600 Costs 29,300 Current assets Fixed assets Balance Sheet $ 23,000 Long-term debt $ 40,000 78,000 Equity 61,000 Total $ 101,000 Total $ 101.000 Taxable income Taxes (34%) $ 9,300 3,162 Net income $ 6,138 Assets and costs are proportional to sales. The company maintains a constant 25 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 answer to 2 decimal places, e.g., 32.16.) Maximum increase in sales 2.00 points Problem 3-20 Fixed Assets and Capacity Usage The discussion of EFN in the chapter implicitly assumed that the company was operating at full capacity Often, this is not the case. For example, assume that Rosengarten was operating at 90 percent capacity Full capacity sales would be $1,000 /90 - $1,111. The balance sheet shows $1,800 in fixed assets. The capital intensity ratio for the company is: Capital intensity ratio. Fixed assets/Full-capacity sales - $1,800 / $1.111 - 1.62 This means that Rosengarten needs $1.62 in fixed assets for every dollar in sales when it reaches full capacity. At the projected sales level of $1,250, it needs $1,250 * 1.62 $2,025 in fixed assets, which is $225 lower than our projection of $2,250 in fixed assets. So, EFN is only $565-225 - $340. Thorpe Mfg., Inc., is currently operating at only 90 percent of fixed asset capacity. Current sales are $805,500 and sales are projected to grow to $940,000. The current fixed assets are $775,000 How much in new fixed assets are required to support this growth in sales? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g. 32.) New fixed assets $