1. The table given below summarizes the 2019 income statement and end-year balance sheet of Drakes Bowling Alleys. Drakes financial manager forecasts a 10% increase in sales and costs in 2020. The ratio of sales to average assets is expected to remain at 0.40. Interest is forecasted at 5% of debt at the start of the year. At the end of 2018 debt was $2,400,000 and assets were $6,960,000. (10 points)

2. Income Statement
   $ in thousands
   Sales	$	2,900	(40% of average assets)
   Costs		2,175	(75% of sales)
   Interest		120	(5% of debt at start of year)
   Pretax profit		605
   Tax		242	(40% of pretax profit)
   Net income	$	363
   						Balance Sheet
   						$ in thousands
   						Net assets	$	7,540		Debt	$	2,400
   										Equity		5,140
   						Total	$	7,540		Total	$	7,540
   						a. What is the expected level of assets at the end of 2020? b. If the company pays out 50% of net income as dividends, how much cash will Drake need to raise in the capital markets in 2020? Assumes debt remains constant. c. If Drake is unwilling to make an equity issue, what will be the debt ratio at the end of 2020?