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The income statement, also known as the profit and loss statement, helps calculate the firm's net income that is available to shareholders. The income statement is usually prepared using the International Financial Reporting Standards (IFRS), which match revenues and expenses to the period in which they were incurred, not necessarily when cash was received or paid. The following is the income statement of Western Gas \& Electric Co. in its first year of operation: The firm's CEO would like sales to increase by 25% next year. Assume that (1) the operating costs (excluding depreciation) remain at 80% of sales, (2) depreciation remains at 4% of sales, and (3) the interest cost increases from 10% to 15% of earnings before interest and taxes (EBIT). The tax rate of 40% also remains the same. What will be the company's operating income in the second year? According to the income statement given, Western Gas \& Electric Co.'s earnings before interest, taxes, depreciation, and amortization (EBITDA) was $300 million in the first year. Suppose the government considers a provision that will require firms to depreciate their assets over a longer period time. This provision will decrease the firm's annual depreciation expense but will have no effect on its sales revenue or tax rates. If the passes, which of the following statements will be correct? Check all that apply. Western Gas \& Electric Co. will pay more in taxes. Western Gas \& Electric Co.'s EBITDA will remain unchanged. Western Gas \& Electric Co.'s operating income will increase. Western Gas \& Electric Co. will have a higher net income. Western Gas \& Electric Co.'s operating income will decrease. Western Gas \& Electric Co. had 25 million shares of common stock outstanding in both years. What will be the firm's earnings per share (EPS) in the second year? $10.20$6.12$12.00$63.00