Question

The most recently completed income statement for RP Corporation is given below, along with assumptions for the following year. Use this information and create a projected income statement for the company.

Sales                   15,000,000
COGS                   6,000,000
Gross                   9,000,000
Operating Expenses               7,500,000
Depreciation and Amortization       400,000
EBIT             1,100,000
Interest Expense               300,000
EBT                       800,000
Taxes                    240,000
Net Income                   560,000
Shares                   300,000
EPS                       $ 1.87

Sales increase by 20%
COGS as a percentage of sales falls by 200 basis points
Operating Expenses as a percentage of sales falls by 100 basis points
Depreciation and Amortization increases by 20%
The company issues $1,000,000 of additional debt at an interest rate of 7%
The company retires $500,000 of existing debt at an interest rate of 12%
The tax rate will remain the same
The company sells an addition 50,000 shares of stock

  

Answer 1

I have prepared the projected income statement for the company for the following year.