The following information is available for a company. Set up the income statement and balance sheet for 2007, then forecast the income statement and balance sheet for 2008, assuming sales grow by 15%

During 2008 the company is going to buy a $300,000 machine, depreciated SL over 6 years. It will do its financing for next year using bonds that have a coupon rate of 8%. It pays $100,000 a year on its long term debt.

**Show work on how the answer was done*

	2007	2008
Additional Financing Necessary
Dividends (30% payout)
Taxable Income
Depreciation	$50,000
Cash	$175,000
Accruals	$50,000
Raw material	$400,000
Curr. Assets
LTD at 10%	$600,000
Labor	$312,500
Accum. Depr.	$475,000
ST portion of LTD	$100,000
A/P	$50,000
TL & NW
Operating Costs	$125,000
A/R	$275,000
Curr. Liab.
GFA	$1,550,000
Sales	$1,250,000
Total Assets
CS	$480,000
Interest	$76,000
Contri. To RE
COGS
NFA
EBIT
Other Fixed Costs	$55,000
Taxes (40%)
Gross Profits
RE	$425,000
Inv.	$255,000
N/P at 8%	$75,000
After Tax Income