Answer:
Due to increased sales, the company’s debt will decline by 187.5 dollars
Explanation:
total income of 2,250
dividends amounting to 900
payout ratio: 900/2,250 = 0.4
income projected to grow by 5%
2,250 multiplied by 1.05 equals 2,362.5
retained earnings for breakeven:
2,362.5 times ( 1 - 0.4) equals 1,417.5
asset increase:
24,600 multiplied by 0.05 equals 1,230
Now we apply this to the accounting equation:
Assets = liabilities + equity
+1,230 = liabilities + 1,417.5
thus, liabilities = -187.5