Cute Camel Woodcraft Company’s income statement reports data for its first year of operation. The firm’s 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 company’s operating costs (excluding depreciation and amortization) remain at 75.00% of net sales, and its depreciation and amortization expenses remain constant from year to year.
3.	The company’s 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 $938,081 of preferred and common stock dividends, respectively.

Cute Camel Woodcraft Company
Income Statement
Years Ending December 31
	Year 2 (Forecasted)	Year 1
Net sales		$15,000,000
Fixed operating costs, except depreciation and amortization	( FILL IN BLANK)	(11,250,000)
Depreciation and amortization expenses	(600,000)	(600,000)
Net operating income (or EBIT)	FILL IN BLANK	$3,150,000
Interest	(FILL IN BLANK)	(315,000)
Earnings before taxes (or EBT)	FILL IN BLANK	$2,835,000
Taxes (40%)	(FILL IN BLANK)	(1,134,000)
Net Income	FILL IN BLANK	$1,701,000
Preferred dividends	(FILL IN BLANK)	(300,000)
Earnings available to common stockholders (EAC)	FILL IN BLANK	$1,401,000
Common dividends	(FILL IN BLANK)	(765,450)
Addition to retained earnings	$846,544	$635,550