1. Prepare a pro forma 2019 Income Statement (Option A) based on the following projections:

A projected sales increase of 20% based on the product line expansion

2019 expense projections:

COGS will remain at the 2018 %

Selling expense will increase 15%

General/admin expenses will increase 5%

Additional financing through long-term debt at 4% interest will result in an

increase in interest expense. Aveena anticipates needing an additional

$2,000,000 of long-term debt to support the sales projection.

Tax rate 30%

c. 76,000 shares of stock are currently issued d. Dividend payout ratio = 50%

Prepare a what-if Pro Forma I/S for option B based on the following scenario:

Instead of increasing long term debt, the firm raises the additional capital by issuing and

additional 5,000 shares of common stock

Calculate the revised net income, EPS and DPS

All other projections as indicated in #1 remain.

Provide a Cost of Goods illustration of the impact on Net Income if the firm was able to lower COGS to the competitors average, under Option A financing. Illustrate the change in Net Income on both a $ and % change basis.

** This question has been answered before but there was no work to go with it, and in order for me to understand the problem having the work shown would be beneficial for me to work on future problems