Cold Goose Metal Works Inc.s income statement reports data for its first year of operation. The firms CEO would like sales to increase by 25% next year.

Cold Goose is able to achieve this level of increased sales, but its interest costs increase from 10% to 15% of earnings before interest and taxes (EBIT).

The companys operating costs (excluding depreciation and amortization) remain at 70.00% of net sales, and its depreciation and amortization expenses remain constant from year to year.

The companys tax rate remains constant at 40% of its pre-tax income or earnings before taxes (EBT).

In Year 2, Cold Goose expects to pay $100,000 and $896,963 of preferred and common stock dividends, respectively

Cold Goose Metal Works Inc.
Income Statement for Year Ending December 31
	Year 1	Year 2 (Forecasted)
Net sales	$15,000,000
Less: Operating costs, except depreciation and amortization	10,500,000
Less: Depreciation and amortization expenses	600,000	600,000
Operating income (or EBIT)	$3,900,000
Less: Interest expense	390,000
Pre-tax income (or EBT)	$3,510,000
Less: Taxes (40%)	1,404,000
Earnings after taxes	$2,106,000
Less: Preferred stock dividends	100,000
Earnings available to common shareholders	$2,006,000
Less: Common stock dividends	737,100
Contribution to retained earnings	$1,109,037	$1,565,787

Given the results of the previous income statement calculations, complete the following statements:

	In Year 2, if Cold Goose has 10,000 shares of preferred stock issued and outstanding, then each preferred share should expect to receive in annual dividends.
	If Cold Goose has 500,000 shares of common stock issued and outstanding, then the firms earnings per share (EPS) is expected to change from in Year 1 to in Year 2.
	Cold Gooses before interest, taxes, depreciation and amortization (EBITDA) value changed from in Year 1 to in Year 2.
	It is to say that Cold Gooses net inflows and outflows of cash at the end of Years 1 and 2 are equal to the companys annual contribution to retained earnings, $1,109,037 and $1,565,787, respectively. This is because of the items reported in the income statement involve payments and receipts of cash.