Rondolo, Inc. is currently operating at maximum capacity. All costs, assets, and current liabilities vary directly with sales. The tax rate 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 4% ($ in millions)?
A) -$562.50
B) -$122.08
C) $318.01
D) $416.00
E) $598.75

Question

Rondolo, Inc. is currently operating at maximum capacity. All costs, assets, and current liabilities vary directly with sales. The tax rate 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 4% ($ in millions)?
A) -$562.50 
B) -$122.08 
C) $318.01 
D) $416.00 
E) $598.75

Quizplus · Accepted Answer

The Answer of   Rondolo, Inc. is currently operating at maximum capacity. All costs, assets, and current liabilities vary directly with sales. The tax rate 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 4% ($ in millions)?
A) -$562.50 
B) -$122.08 
C) $318.01 
D) $416.00 
E) $598.75