The most recent financial statements for Alexander Co. are shown here: Income Statement Balance Sheet Sales $ 49,800 Current assets $ 23,400 Long-term debt $ 52,500 Costs 37,900 Fixed assets 90,000 Equity 60,900 Taxable income $ 11,900 Total $ 113,400 Total $ 113,400 Taxes (34%) 4,046 Net income $ 7,854 Assets and costs are proportional to sales. The company maintains a constant 30 percent dividend payout ratio and a constant debt–equity ratio. What is the maximum dollar increase in sales that can be sustained assuming no new equity is issued? (Do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.) Maximum increase in sales $

$4945.14

Explanation:

The computation of the maximum increase in sales is shown below:

But before that we need to do the following calculations

Return on Equity = Net Income ÷ Total Equity × 100

= $7,854 ÷ 60,900  × 100

= 12.9%

And, Dividiend Payaout Ratio = 30%

So, retention ratio = 100% - 30%

= 70%

Now

Sustainable Growth rate equation is

= [(Return on Equity × retention Ratio) ÷ ([1 - (Return on Equity × retention ratio)]

= [(0.129 × 0.7) ÷ [1 - (0.129 × 0.7)]

= [( 0.0903) ÷ [1 -(0.0903)]

= 0.993

= 9.93%

So, Maximum dollar increase in sales os

= $49,800 ×  9.93%

= $4945.14

a.   is the correct choice.

good luck. : )

a progressive tax is a tax that imposes a lower tax rate on low-income earners compared to those with a higher income, making it based on the taxpayer's ability to pay. that means it takes a bigger percentage from high income earners than it does from low income people.