Sales $700 Operating costs including depreciation 500 EBIT $200 Interest 40 EBT $160 Taxes (40%) 64 Net income $ 96 Dividends $ 32 Addition to retained earnings $ 64 For the coming year, the company is forecasting a 25% increase in sales, and it expects th operating costs, including depreciation, will equal 70% of sales. Austin's tax rate, interest dividend payout ratio are all expected to remain constant.
Sales $700 Operating costs including depreciation 500 EBIT $200 Interest 40 EBT $160 Taxes (40%) 64 Net income $ 96 Dividends $ 32 Addition to retained earnings $ 64 For the coming year, the company is forecasting a 25% increase in sales, and it expects th operating costs, including depreciation, will equal 70% of sales. Austin's tax rate, interest dividend payout ratio are all expected to remain constant.
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 20P
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please answer the following question
![6. Austin Grocers recently reported the following 2019 income statement (in millions of dollars):
Sales
$700
Operating costs including depreciation
500
EBIT
$200
Interest
40
EBT
$160
Taxes (40%)
64
Net income
$ 96
$ 32
$ 64
Dividends
Addition to retained earnings
For the coming year, the company is forecasting a 25% increase in sales, and it expects that its year-end
operating costs, including depreciation, will equal 70% of sales. Austin's tax rate, interest expense, and
dividend payout ratio are all expected to remain constant.
1. What is Austin's projected 2020 net income?
2. What is the expected growth rate in Austin's dividends?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fdc251732-f142-48dd-b2d1-185c331d4b8e%2Fdc4eea5d-12d1-4e90-9d59-2a548d8b5021%2F57blpln_processed.png&w=3840&q=75)
Transcribed Image Text:6. Austin Grocers recently reported the following 2019 income statement (in millions of dollars):
Sales
$700
Operating costs including depreciation
500
EBIT
$200
Interest
40
EBT
$160
Taxes (40%)
64
Net income
$ 96
$ 32
$ 64
Dividends
Addition to retained earnings
For the coming year, the company is forecasting a 25% increase in sales, and it expects that its year-end
operating costs, including depreciation, will equal 70% of sales. Austin's tax rate, interest expense, and
dividend payout ratio are all expected to remain constant.
1. What is Austin's projected 2020 net income?
2. What is the expected growth rate in Austin's dividends?
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