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Calculate the EFN for 10, 15 and 40 percent growth rates. (A negative answer should be indicated by a minus sign. Do not round intermediate
Calculate the EFN for 10, 15 and 40 percent growth rates. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to the nearest whole dollar amount.)
***What is the EFN for 10% and 15% ?
The most recent financial statements for Scott, Inc., appear below. Interest expense will remain constant; the tax rate and the dividend payout rate also will remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. Assume the firm is operating at full capacity and the debt- equity ratio is held constant. SCOTT, INC. 2019 Income Statement Sales Costs Other expenses $762,000 618,000 28,500 Earnings before interest and taxes Interest expense $ 115,500 13,600 Taxable income Taxes (24%) $ 101,900 24,456 Net income $ 77,444 Dividends Addition to retained earnings $ 37,740 39,704 SCOTT, INC. Balance Sheet as of December 31, 2019 Assets Liabilities and Owners' Equity Current assets Current liabilities Cash $ 25,140 Accounts payable $ 61,000 Accounts receivable 34,550 Notes payable 17,300 Inventory 71,330 Total $ 78,300 Total $ 131,020 Long-term debt $ 110,000 Owners' equity Common stock and paid-in surplus Retained earnings Fixed assets Net plant and equipment $ 105,000 $ 219,000 56,720 Total $ 161,720 Total assets $350,020 Total liabilities and owners' equity $350,020 Complete the pro forma income statements below. (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.) Sales Costs Other expenses EBIT Interest expense Taxable income Taxes (24%) Net income Dividends Add to RE Pro Forma Income Statement 10% Sales Growth 15% Sales Growth 40% Sales Growth $ 838,200 $ 876,300 $ 1,066,800 679,800 710,700 865,200 31,350 32,775 39,900 127,050 $ 132,825 $ 161,700 13,600 13,600 13,600 $ 113,450 119,225 $ 148,100 27,228 28,614 35,544 $ 86,222 $ 90,611 $ 112,556 42,018/ $ 44,157 $ 54,851 44,204 46,454 57,705 Calculate the EFN for 10, 15 and 40 percent growth rates. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to the nearest whole dollar amount.) 10% 15% EFN 40% 57,903 $Step by Step Solution
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