Please answer and fill in the blank of the following questions:

Inputs: financial statements for 2015

INCOME STATEMENT Sales$1,200 Costs$1,000 Net income=$200

BALANCE SHEET Assets$2,000 Debt$800 Equity$1,200 Total $2000 Total $2,000 Fill in the blank :

We forecast total sales will increase by 10% in 2016.

A-Costs are proportional of sales. Thus, costs in 2016 should .

B-We have no spare capacity, which means we current fixed asset could not sustain this growth. Thus, our PP&E in 2016 should.. .

C-Suppose we maintain a fixed D/E ratio in 2016. Thus, both debt and equity should.. . Q2: Outputs: pro forma statements for 2016 INCOME STATEMENT: Sales$1,320 Costs$1,100 Net income=$220

BALANCE SHEET: Assets$2,200 Debt$880 Equity$1,320 Total$2,200 Total$2,200 Question: D- If net income is forecast at $220, why shareholders equity increase by only $120?