Data for STU Enterprises:

• Total Revenue: $1,200,000
• Sales Discounts: $25,000
• Returns and Allowances: $20,000
• Net Sales: $1,155,000
• Cost of Goods Sold: $600,000
• Operating Expenses: $300,000
• Interest Expense: $15,000
• Tax Rate: 30%

Requirements:

1. Prepare an income statement.
2. Calculate the net profit margin.
3. Determine the amount of taxes paid.
4. Analyze how a 5% increase in cost of goods sold would affect net income.
5. Discuss the role of interest expense in profitability.