?(Leverage and? EPS) You have developed the following pro forma income statement for your? corporation: It represents the most recent? year's operations, which ended yesterday. Your supervisor in the? controller's office has just handed you a memorandum asking for written responses to the following? questions:

a. If sales should increase by 30 ?percent, by what percent would earnings before interest and taxes and net income? increase?

b. If sales should decrease by 30 ?percent, by what percent would earnings before interest and taxes and net income? decrease?

c. If the firm were to reduce its reliance on debt financing such that interest expense were cut in? half, how would this affect your answers to parts a and b??

Sales	$45,793,000
Variable Costs	(22,756,000)
Revenue Before Fixed Costs	$23,037,000
Fixed Costs	(9,175,000)
EBIT	$13,862,000
Interest Expense	(1,433,000)
Earnings Before Taxes	$12,429,000
Taxes (50%)	(6,214,500)
Net Income	$6,214,500