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03: Assignment- Financial Statements, Cash Flow, and Taxes reen Caterpillar Garden Supplies Inc.'s income statement reports data for its first year of operation. The firm's CEO would like sales to increase ext year 1, Green Caterpillar is able to achieve this level of increased sales, but its interest costs increase from 10% to 15% of earnings before intere and taxes (EBIT). 2. The company's operating costs excluding depreciation and amortization remain at 75% of net sales, and its depreciation and amortizatio expenses remain constant from year to year. 3. The company's tax rate remains constant at 40% of its pre-tax income or earnings before taxes (EBT). 4. In Year 2, Green Caterpillar expects to pay $300,000 and $625,388 of prefered and common stock dividends, respectively Complete the Year 2 income statement data for Green Caterpillar, then answer the questions that follow. Be sure to round each dollar value to the nea whole dollar Green Caterpillar Garden Supplies Inc. Income Statement for Year Ending December 31 Year 2 Year 1 (Forecasted) Net sales Less: Operating costs, except depreciation and amortization Less: Depreciation and amortization expenses $10,000,000 7,500,000 400,000 400,000 Operating income (or EBIT) $2,100,000 Less: Interest expense 210,000 Pre-tax income (or EBT) 1,890,000 756,000 $1,134,000 300,000 834,000 510,300 $323,700 Less: Taxes (40%) Earnings after taxes Less: Preferred stock dividends Earnings available to common shareholders Less: Common stock dividends Contribution to retained earnings $464,362 O Type here to search

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