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6. Kenny Corporation recently reported the following income statement for 2001 (numbers are in millions of dollars): Sales Operating costs EBIT Interest Earnings before taxes
6. Kenny Corporation recently reported the following income statement for 2001 (numbers are in millions of dollars): Sales Operating costs EBIT Interest Earnings before taxes (EBT) Taxes (40%) Net income available to common shareholders $7,000 3,000 $4,000 200 $3,800 520 $2,280 The company forecasts that its sales will increase by 10 percent in 2002 and its operating costs will increase in proportion to sales. The company's interest expense is expectedto remain at $200 million, and the tax rate will remain at 40 percent. The company plans to pa out 50 percent of its net income as dividends, the other 50 percent will be additions to retained earnings. What is the forecasted addition to retained earning for 2002? a. $1,140 b. $1,260 c. $1,440 d. $1,790 e. $1,810
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