Major Manuscripts, Inc., is currently operating at 80 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?

Major Manuscripts, Inc. 2012 Income Statement 8,400 7,450 290 660 Net sales Cost of goods sold Depreciation Earnings before interest and axes Interest paid Taxable Income Taxes Net income 30 $630 270 $360 $190 Dividends Major Manuscripts, Inc. 2012 Balance Sheet 2012 2012 Accounts payable2,200 260 Common stock $2,400 4,560 $2,400 Cash Accounts rec. Inventory Total Net fixed assets otal assets 940 2,700 6,040 3,380 9,420 Long-term debt Retained earnings Total liabilities & 9,420