Yvonne Martin owns a hairdressing shop, In-style Now. It is now September 20X3, and Yvonne thinks she might need a bank loan. Her bank has asked Yvonne to prepare a 'projected' income statement and to calculate the 'projected' profit margin for next year. Although she has never developed this information before, she understands that to do so she must make a 'best guess' of her revenues and expenses for 20X4 based on past activities and future estimates. She asks for your help and provides you with the following information.

a Styling revenues for \(20 \mathrm{X} 3\) were \(\$ 98000\). Yvonne expects these to increase by 10 per cent in 20X4.

b In-style Now employees are paid a total 'base' salary of \(\$ 42000\) plus 20 per cent of all styling revenues.

c Hairdressing supplies used have generally averaged 15 per cent of styling revenues; Yvonne expects this relationship to be the same in 20X4.

d In-style Now recently signed a two-year rental agreement on its shop, requiring payments of \(\$ 560\) per month, payable in advance.

e The cost of utilities (electricity, water, phone) is expected to be 25 per cent of the yearly rent.

f In-style Now owns styling equipment that cost \(\$ 16800\). Depreciation expense for 20X4 is estimated to be one-sixth of the cost of this equipment.

Required:

Prepare a projected income statement for In-style Now for 20X4 and calculate its projected profit margin. Show your calculations.