Year 1 Year 2 (Forecasted) Net sales $20,000,000 $25,000,000 Less: Operating costs, except depreciation and amortization 14,000,000 16,250,000 Less: Depreciation and amortization expenses 800,000 800,000 Operating income (or EBIT) $5,200,000 $7,950,000 Less: Interest expense 520,000 795,000 Pre-tax income (or EBT) 4,680,000 71,555,000 Less: Taxes (40%) 1,872,000 Earnings after taxes $2,808,000 $ Less: Preferred stock dividends 200,000 Earnings available to common shareholders 2,608,000 Less: Common stock dividends 842,400 Contribution to retained earnings $1,765,600 $