Here is the assumptions and data;

a. Sales Revenue Year 1: $10,000,000 Annual Growth Rate Thereafter: 4.5%

b. Cost of Goods Sold: $5,000,000 Important Note: NO CHANGE in the cost of goods sold amount for years 2 and 3; it remains the same.

c. Operating Expenses:

For year 1: Advertising: $500,000 Payroll: $2,500,000 Utilities: $150,000 Services: $150,000. Assume an annual growth rate of 3% for all of these operating expenses after year 1.

d. Other expense: Do not inculde the following expenses in opearting expense, but include them after calculating operating incoming.

Deprecation: the base is $3,000,000, deprecation is over 5 years and is taken on a straight line basis,

Interest Expense: $250,000;

Taxes: $250,000

Important Note: There is NO CHANGE in the amounts of deprecatioin, Interest and Taxes from Year 1.

e. Shares and stock price data:

10 Million shares of common stock outstanding

stock price per share: Year 1: $6; Year 2: $7; Year 3: $10

questions:

Year 1 Gross Margin:_______

Year 1 Operating Income:______

Year 1 Deprecation Expense: _________

Year 1 Net Income:_______

Year 2 Sales Revenue:______

Year 2 Operating Income:______

Year 2 Net Income:______

Year 2 Operating Income:________

Year 3 Net Income:______

EPS for Year 1:________

EPS for Year 2:________

EPS for Year 3:________

EP for Year 1:________

EP for Year 2:________

EP for Year 3:________