Answer:
As a result in the increase in sales, the firm debt will decrease by 187.5 dollars
Explanation:
income of 2,250
dividends of 900
payout ratio: 900/2,250 = 0.4
income will increase by 5%
2,250 x 1.05 = 2,362.5
retained earnings break even:
2,362.5 x ( 1 - 0.4) = 1,417.5
increase in assets:
24,600 x 0.05 = 1,230
now we post this into the accounting equation:
Assets = liab+ equity
+1,230 = liab + 1,417.5
liab = -187.5