Self-supporting growth rate = [Profit Margin * Retention Ratio * S0] / [A0 - L0 - {Profit Margin * Retention Ratio * S0}]
where,
Profit Margin = Net Income / Sales = 5%
L0 = Spontaneous Liabilities = Accounts Payable + Accruals = $500,000 + $200,000 = $700,000
Self-supporting growth rate = [0.05 * 0.30 * $4,000,000] / [$2,800,000 - $700,000 - {0.05 * 0.30 * $4,000,000}]
= $60,000 / $2,040,000 = 0.029412, or 2.9412%
Increase in Sales = S0 * Self-supporting growth rate
= $4,000,000 * 0.029412 = $117,647.06
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