Question

This is the HW question I cannot get the correct answer for. I've completed the first step but I cannot seem to get the correct numbers for EFN for 20, 25 and 30%!?!? See below for given financial statements and my table with the pro forma of 20, 25 and 30% numbers

The most recent financial statements for Scott, Inc., appear below. Interest expense will remain constant; the tax rate and the dividend payout rate also will remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales.

SCOTT, INC. 2019 Income Statement
Sales				$	755,000
Costs					611,000
Other expenses					25,000
Earnings before interest and taxes				$	119,000
Interest expense					10,800
Taxable income				$	108,200
Taxes (22%)					23,804
Net income				$	84,396
Dividends	$	31,840
Addition to retained earnings		52,556

SCOTT, INC. Balance Sheet as of December 31, 2019
Assets				Liabilities and Owners’ Equity
Current assets				Current liabilities
Cash	$	24,440		Accounts payable	$	58,200
Accounts receivable		33,780		Notes payable		15,200
Inventory		70,700		Total	$	73,400
Total	$	128,920		Long-term debt	$	103,000
				Owners’ equity
Fixed assets				Common stock and paid-in surplus	$	98,000
Net plant and equipment	$	212,000		Retained earnings		66,520
				Total	$	164,520
Total assets	$	340,920		Total liabilities and owners’ equity	$	340,920

							0.2	0.3	0.4
Sales				$	755,000		906000	943750	981500
Net income				$	84,396		101275.2	107601	112242
Dividends	$	31,840					38208	40597.86	36175.5966
Addition to retained earnings		52,556					63067.2	67003.14	69893.0934

Calculate the EFN for 20, 25 and 30 percent growth rates.

Answer 1