Income Statement 1st Pass Forecast Year 2nd Pass Forecast Year Yr 0 8750 8750 Sales CGS Dert EBIT Interest EBT Taxes (25%) Net Income $ 7000 6000 400.1.25 $ 600 200 S 400 100 $ 300 Dix Add to RE 200 $ 100 Balance Sheet Total Assets $3420 4275 4275 I 80 80 AP NP Accrued Wages Current Liab $ 70 80 70 $ 220 LTD 1000 Common Stock 1000 Retained Earnings Total Common Eg. $ 2200 1200 T. Liab & Equity $ 3420 AFN 1. Calculate the proforma income statement and balance sheet assuming 25% growth (use the constant growth method and assume the company is at full capacity). Assume additional funds needed will come from 50% LTD and 50% from a common stock issue. Interest on the debt is 12% and the common stock will sell for $25 per share and pay $0.50 per share in dividends. Explain the agency relationship within a company. Describe some of the costs to the company associated with having agents within the firm and ways to reduce these costs