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A firm has sales of $20, current liabilities of $5, net fixed assets of $30, and a 10 percent profit margin. The firm uses debt
A firm has sales of $20, current liabilities of $5, net fixed assets of $30, and a 10 percent profit margin. The firm uses debt to finance its operations and does not pay any dividends. Sales are expected to increase by 20 percent next year. The tax rate is 34%. If all assets, short-term liabilities, and costs vary directly with sales, how much debt has changed over the two years?
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