Please only typewritten answers- no handwritten answers please.

The product and marketing departments at ABC Corp are estimating a growth rate of 15 percent for next year. Consider the two distinct scenarios below:

1. Assume fixed assets increase proportionally to sales and will be depreciated at a similar rate to existing fixed assets.
2. Assume that, to increase production, ABC Corp must set up an entirely new location at a cost of $10,000,000. The new fixed assets will be depreciated at 10% a year.
3. Discuss the methodology used above. What would you likely change if you operated in an environment in which certain balance sheet items dont vary proportionally with sales?

Financials Income Statement Sales COGS Other expenses Depreciation EBIT Interest Taxable income Taxes (40%) Net income S80,518,460 S58,672,892 S10,210,200 $3,608,440 $8,026,928 $1,261,040 $6,765,888 $2,706,355 $4,059,533 Dividends Add to RE $1,220,000 $2,839,533 Bafance Sheet Assets Liabilities and Equity Current assets Current liabilities Cash Accounts rec. Inventory Total CA S912,870 $1,466,250 Notes payable $2,146,360 $4,525,480 Accounts payable $1,858,010 $4,242,700 $6,100,710 Total CL Long-term debt $11,000,000 Fixed assets Net PP&E S35,446,860 Shareholder equity Common stock Retained earnings Total equity S800,000 $22,071,630 Total Assets $39,972 340 Total L&E Page 1