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Walter Industries has $5 billion in sales and $1.7 billion
in fixed assets. Currently, the company’s fixed assets are operating at 90% of
capacity.

a. What level of sales could Walter Industries have obtained
if it had been operating at full capacity?

b. What is Walter’s target fixed assets/sales ratio?

c. If Walter’s sales increased 12%, how large of an increase
in fixed assets would the company need in order to meet its target fixed
assets/sales ratio?