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% 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 $200,000 and $1,025,100 of preferred and common stock dividends, respectively.

Cute Camel Woodcraft Company Income Statement For Year Ending December 31 Year 1 Year 2 (Forecasted) $20,000,000 Net sales 14,000,000 Less: Operating costs, except depreciation and amortization Less: Depreciation and amortization expenses Operating income (or EBIT) 800,000 $5,200,000 520,000 Less: Interest expense Pre-tax income (or EBT) 4,680,000 Less: Taxes (40%) 1,872,000 Earnings after taxes $2,808,000 $ Less: Preferred stock dividends 200,000 Earnings available to common shareholders 2,608,000 Less: Common stock dividends 842,400 Contribution to retained earnings $1,765,600 $