FUZzy Button Clothing 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. Fuzzy Button 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 (exduding depreciation and amortization) remain at 75 % 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, Fuzzy Button expects to pay $100,000 and $833,850 of preferred and common stock dividends, respectively. Complete the Year 2 income statement data for Fuzzy Button, then answer the questions that follow. Be sure to round each dollar value to the nearest whole dollar. Fuzzy Button Clothing Company Income Statement for Year Ending December 31 Year 2 Year 1 (Forecasted) Net sales $15,000,000 Less: Operating costs, except depreciation and amortization 11,250,000 Less: Depreciation and amortization expenses 600,000 600,000 Operating income (or EBIT) $3,150,000 Less: Interest expense 315,000 Pre-tax income (or EBT) 2,835,000 Less: Taxes (40 % ) 1,134,000 Eamings after taxes $1,701,000 $2,084,625 Less: Preferred stock dividends 100,000 100,000 Earnings available to common shareholders 1,601,000 1,984,625 Less: Common stock ends 680,400 833,850 Contribution to retained earnings $920,600 $1,150,775 Given the results of the previous income statement calculations, complete the following statements: In Year 2, if Fuzzy Button has 5,000 shares of preferred stock issued and outstanding, then each preferred share should expect to ceive in annual dividends. .If Fuzzy Button has 400,000 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. Fuzzy Button's before interest, taxes, depreciation and amortization (EBITDA) value changed from in Year 1 to in Year 2. .It is contribution to retained earnings, $920,600 and $1,150,775, respectively. This is because statement involve payments and receipts of cash. to say that Fuzzy Button's net inflows and outflows of cash at the end of Years 1 and 2 are equal to the company's annual all but one of the item reported in the income