a) Based on following financial statements for WoodKid Toys Inc., calculate the EFN given that firm expected sales is $9,000,000 for the next year and the company will issue new stock, increasing the number of shares outstanding from 122,000 to 145,000. Note that the new shares are expected to be traded at $4.8. Assume that cost of goods sold, operational expenses, assets and current liabilities are directly proportional to sales and interest expense is fixed. WoodKid Toys Inc. does not pay dividends.

Income Statement (in thousands)

Sales Revenue 7,200

Cost of Goods Sold ($5,544)

Gross Profit $1,656

Operational Expenses ($864)

EBIT $792

Interest Expense ($125)

EBT $667

Tax Expense ($173.42)

Net Income $493.58

Balance Sheet (in thousands)

Assets Liabilities and Stockholders Equity

Current Assets $920 Current Liabilities $650

Fixed Assets $3500 Long-Term Debt $1700

Total Assets $4420 Total Liabilities $2350

Stockholders Equity $2070

Total Liabilities and

Stockholders Equity $4420

b) What will EFN be if WoodKid Toys Inc. decides not to issue the new shares?