Sales for 2008 are projected to be $25,000; The firm currently uses straight line depreciation; No new equipment purchases are planned for 2008; There will be a 100% earnings distribution for 2008. The current assets accounts payable and accrued expenses vary at a constant percent of sales as do COGS and selling expenses. Assume that notes payable is paid off in 2008

Reference: Ref 6-1

Operating Income for 2008 is projected to be:

Income Statement for the year ending December 31, 2007 (In thousands) $20,000 Sales COGS 9,100 10,900 Selling Expenses 2,000 Depreciation 1,500 Fixed Expenses 2,000 EBIT 5,400 Taxes (40%) 2,160 Net Income 3,240 Common Stock Div 600 2,640 Balance Sheet December 31, 2007 (in thousands) Assets: Total Current Assets $50,000 Net Plant & Equipment 35,000 Total Assets Liabilities & Equity $20,000 Accounts Payable Notes Payable 5,000 Accrued Expenses 5,000 Bonds Payable 20,000 Common Stock 20,000 10,000 Capital in Excess of Par Retained Earnings 5,000 Total Liabilities & Equity S85100