Major Manuscripts, Inc.

$2012$ Income Statement

Net sales $ $7,100$

Cost of goods sold $6,300$

Depreciation

$160$

Earnings before interest and taxes $ $640$

Interest paid

$31$

Taxable Income $ $609$

Taxes

$205$

Net income

$

$404$

Dividends $ $181$

Major Manuscripts, Inc.

$2012$ Balance Sheet

$20122012$

Cash $ $2,270$ Accounts payable $ $1,250$

Accounts rec. $810$ Long$-$term debt $300$

Inventory

$2,050$

Common stock $ $2,400$

Total $ $5,130$ Retained earnings

$4,430$

Net fixed assets

$3,250$

Total assets

$

$8,380$

Total liabilities & equity

$

$8,380$

Major Manuscripts, Inc., is currently operating at $70$ percent of capacity. All costs and net working capital vary directly with sales. The tax rate, the profit margin, and the dividend payout ratio will remain constant. How much additional debt is required if no new equity is raised and sales are projected to increase by $10$ percent?

Group of answer choices

$$245$

$$268$

$$143$

$$125$

$$513$