Excess capacity

Krogh Lumber's 2012 financial statements are shown here.

Krogh Lumber: Balance Sheet as of December 31, 2012 (Thousands of Dollars)
Cash	$1,800		Accounts payable	$7,200
Receivables	10,800		Notes payable	3,472
Inventories	12,600		Accrued liabilities	2,520
Total current assets	$25,200		Total current liabilities	$13,192
			Mortgage bonds	5,000
Net fixed assets	21,600		Common stock	2,000
			Retained earnings	26,608
Total assets	$46,800		Total liabilities and equity	$46,800

Krogh Lumber: Income Statement for December 31, 2012 (Thousands of Dollars)
	Sales	$36,000
	Operating costs including depreciation	30,783
	Earnings before interest and taxes	$5,217
	Interest	1,017
	Earnings before taxes	$4,200
	Taxes (40%)	1,680
	Net income	$2,520
	Dividends (60%)	$1,512
	Addition to retained earnings	$1,008

1. Assume that the company was operating at full capacity in 2012 with regard to all items except fixed assets; fixed assets in 2012 were being utilized to only 80% of capacity. By what percentage could 2013 sales increase over 2012 sales without the need for an increase in fixed assets? Round your answer to two decimal places. %
3. Now suppose 2013 sales increase by 25% over 2012 sales. Assume that Krogh cannot sell any fixed assets. All assets other than fixed assets will grow at the same rate as sales; however, after reviewing industry averages, the firm would like to reduce its Operating costs/Sales ratio to 82% and increase its debt-to-assets ratio to 42%. The firm will maintain its 60% dividend payout ratio, and it currently has 1 million shares outstanding. The firm plans to raise 35% of its 2013 total debt as notes payable, and it will issue bonds for the remainder. Its before-tax cost of debt is 10.5%. Any stock issuances or repurchases will be made at the firm's current stock price of $40. Develop Krogh's projected financial statements. What are the balances of notes payable, bonds, common stock, and retained earnings? Round your answers to the nearest hundredth of thousand of dollars.

   Krogh Lumber Pro Forma Income Statement December 31, 2013 (Thousands of Dollars)
   	2012	2013
   Sales	$36,000	$
   Operating costs (includes depreciation)	30,783	$
   EBIT	$5,217	$
   Interest expense	1,017	$
   EBT	$4,200	$
   Taxes (40%)	1,680	$
   Net Income	$2,520	$
   Dividends	$1,512	$
   Addition to RE	$1,008	$

   Krogh Lumber Pro Forma Balance Statement December 31, 2013 (Thousands of Dollars)
   	2012	2013
   Cash	$1,800	$
   Accounts receivable	10,800	$
   Inventories	12,600	$
   Fixed assets	21,600	$
   Total assets	$46,800	$
   Payables + accruals	$9,720	$
   Short-term bank loans	3,472	$
   Total current liabilities	$13,192	$
   Long-term bonds	5,000	$
   Total debt	$18,192	$
   Common stock	2,000	$
   Retained earnings	26,608	$
   Total common equity	$28,608	$
   Total liab. and equity	$46,800	$