You have been hired to evaluate whether investors should purchase a company called USB Music Cards to Roll. You have been told that this business would likely perform financially exactly like Video to Roll did for the years 1980, 1981 and 1982. Your investors are looking to invest in a business for three years and then sell the same. In your analysis assume the following: A. The Video to Roll cash flows for 1980, 1981 and 1982 would be exactly the same as the projected USB Music Cards to Roll cash flows for the years 2023, 2024 and 2025. For purposes of this exercise, treat the net income from each year as a cash flow. B. The income tax rate for any calculations on any proposed financial statements for each year for USB Music Cards to Roll is 20%. C. For 1980 only, the cost of goods sold for Video to Roll was 60% of Sales. D. Dividends for Video to Roll were 50% of net income for each year 1980, 1981 and 1982. E. Video to Roll had current assets of $10,000 for each of the years 1980, 1981 and 1982, You have been given common-sized income statements and balance sheets for Video to Roll for the years 1980, 1981 and 1982 that collectively depict: (In no specific order): taxes paid, taxable income, interest paid, current assets, fixed assets, current liabilities, long term debt, depreciation, costs of goods sold, gross sales, net income, dividends and additions to retained earnings, earnings before interest and taxes and owner equity and liability. However, because of water stains on the documents, you can only read the entry on the common-sized income statement for taxes paid and it was 2% for each year (1980, 1981 and 1982). You were told and can rely on the fact that the cost of goods sold for Video to Roll decreased by 10% each year commencing 1980 and the depreciation was 10% for 1980 and increased by 10% each of the following two years. Interest paid stayed the same at 20% for each year and taxable income stayed the same at 10% each year. Also, net income stayed the same for each year at 8% and the current assets of Video to Roll was $10,000.00 for each year commencing in 1980. 2 However, you also have access to the 1980, 1981 and 1982 tax returns for Video to Roll which shows the following Taxes paid 1980 $2,000.00 1981 $3,000.00 1982 $4,000.00 The common-sized balance sheets for Video to Roll were not damaged. It showed the following: 1980 1981 1982 Current Assets 20% 10% 40% Fixed Assets 80% 90% 60% Total Assets 100% 100% 100% Current Liabilities 10% 30% 50% Long term Debt 50% 50% 50% Owner equity 40% 20% 0% Total Liabilities and Owner equity 100% 100% 100%

Assume the annual rate of inflation is 3%. Using the net income figure from 1980 from Video to Roll, you calculated in question A1, how much would you need to earn in 2022 from the business to have the same net income as the owners did from 1980 from operating Video to Roll. (Show your work)