Major Manuscripts, Inc. 2012 Income Statement
Net sales	$	8,200
Cost of goods sold		7,250
Depreciation		270
Earnings before interest and taxes	$	680
Interest paid		20
Taxable Income	$	660
Taxes		260
Net income	$	400
Dividends	$	186

Major Manuscripts, Inc. 2012 Balance Sheet
	2012				2012
Cash	$	2,380		Accounts payable	$	2,050
Accounts rec.		920		Long-term debt		270
Inventory		2,600		Common stock	$	2,400
Total	$	5,900		Retained earnings		4,540
Net fixed assets		3,360
Total assets	$	9,260		Total liabilities & equity	$	9,260

Major Manuscripts, Inc., is currently operating at 90 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?

Multiple Choice

• $235

• $355

• $150

• $205

• $590