Consider the following scenario Cute Camel Woodcraft Companys income statement reports data for its first year of operation The firms CEO would like sales to increase by 25 next year 1 Cute Camel 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) 2 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 3 The companys tax rate remains constant at 40 of its pre tax income or earnings before taxes (EBT) 4 In Year 2, Cute Camel expects to pay $300,000 and $2,306,475 of preferred and common stock dividends, respectively Complete the Year 2 income statement data for Cute Camel, then answer the questions that follow Round each dollar value to the nearest whole dollar Cute Camel Woodcraft Company Income Statement for Year Ending December 31 Year 1 Year 2 (Forecasted) Net sales $30,000,000 Less Operating costs, except depreciation and amortization 21,000,000 Less Depreciation and amortization expenses 1,200,000 1,200,000 Operating income (or EBIT) $7,800,000 Less Interest expense 780,000 Pre tax income (or EBT) $7,020,000 Less Taxes (40 ) 2,808,000 Earnings after taxes $4,212,000 Less Preferred stock dividends 300,000 Earnings available to common shareholders $3,912,000 Less Common stock dividends 1,895,400 Contribution to retained earnings $1,605,525 $2,519,025 In Year 2, if Cute Camel has 25,000 shares of preferred stock issued and outstanding, then each preferred share should expect to receive in annual dividends If Cute Camel has 200,000 shares of common stock issued and outstanding, then the firm's earnings per share (EPS) is expected to change from in Year 1 to in Year 2 Cute Camel's before interest, taxes, depreciation and amortization (EBITDA) value changed from in Year 1 to in Year 2 It is to say that Cute Camel's net inflows and outflows of cash at the end of Years 1 and 2 are equal to the company's annual contribution to retained earnings, $1,605,525 and $2,519,025, respectively This is because of the items reported in the income statement involve payments and receipts of cash

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Consider the following scenario: Cute Camel Woodcraft Companys income statement reports data for its first year of operation. The firms CEO would like sales to

Consider the following scenario:

Cute Camel Woodcraft Companys income statement reports data for its first year of operation. The firms CEO would like sales to increase by 25% next year.

1.	Cute Camel 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).
2.	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.
3.	The companys tax rate remains constant at 40% of its pre-tax income or earnings before taxes (EBT).
4.	In Year 2, Cute Camel expects to pay $300,000 and $2,306,475 of preferred and common stock dividends, respectively.

Complete the Year 2 income statement data for Cute Camel, then answer the questions that follow. Round each dollar value to the nearest whole dollar.

Cute Camel Woodcraft Company
Income Statement for Year Ending December 31
	Year 1	Year 2 (Forecasted)
Net sales	$30,000,000
Less: Operating costs, except depreciation and amortization	21,000,000
Less: Depreciation and amortization expenses	1,200,000	1,200,000
Operating income (or EBIT)	$7,800,000
Less: Interest expense	780,000
Pre-tax income (or EBT)	$7,020,000
Less: Taxes (40%)	2,808,000
Earnings after taxes	$4,212,000
Less: Preferred stock dividends	300,000
Earnings available to common shareholders	$3,912,000
Less: Common stock dividends	1,895,400
Contribution to retained earnings	$1,605,525	$2,519,025

In Year 2, if Cute Camel has 25,000 shares of preferred stock issued and outstanding, then each preferred share should expect to receive in annual dividends. If Cute Camel has 200,000 shares of common stock issued and outstanding, then the firm's earnings per share (EPS) is expected to change from in Year 1 to in Year 2. Cute Camel's before interest, taxes, depreciation and amortization (EBITDA) value changed from in Year 1 to in Year 2. It is to say that Cute Camel's net inflows and outflows of cash at the end of Years 1 and 2 are equal to the company's annual contribution to retained earnings, $1,605,525 and $2,519,025, respectively. This is because of the items reported in the income statement involve payments and receipts of cash