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The table given below summarizes the 2004 income statement and end-year balance sheet of Santhosh's...

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Accounting

The table given below summarizes the 2004 income statement and end-year balance sheet of Santhosh's Bowling Alleys. Santhoshs financial manager forecasts a 10% increase in sales and costs in 2005. 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.

Income Statement
$ in thousands
Sales $ 1,000 (40% of average assets)a
Costs 750 (75% of sales)
Interest 25 (5% of debt at start of year)b
Pretax profit 225
Tax 90 (40% of pretax profit)
Net income $ 135

aAssets at the end of 2003 were $2,400,000.

bDebt at the end of 2003 was $500,000.

Balance Sheet
$ in thousands
Net assets $ 2,600 Debt $ 500
Equity 2,100
Total $ 2,600 Total $ 2,600

What is the implied level of assets at the end of 2005?

Note: Enter your answer in dollars not in thousands.

If the company pays out 50% of net income as dividends, how much cash will Santhosh need to raise in the capital markets in 2005? Assumes debt remains constant.

Note: Enter your answer in dollars not in thousands.

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