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Cute Camel Woodcraft Company$$s income statement reports data for its first year of operation. The firm$$s CEO would like sales to increase by $25\%$ next year.

$1.$ Cute Camel is able to achieve this level of increased sales, but its interest costs increase from $10\%$ to $15\%$ of earnings before interest and taxes $($EBIT$).$

$2.$ The company$$s operating costs $($excluding depreciation and amortization$)$ remain at $70\%$ of net sales, and its depreciation and amortization 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 $2,$ Cute Camel expects to pay $$100,000$ and $$1,025,100$ of preferred and common stock dividends, respectively. Cute Camel Woodcraft Company Income Statement

For Year Ending December $31$

Given the results of the previous income statement calculations, complete the following statements:

In Year $2,$ if Cute Camel has $5,000$ shares of preferred stock issued and outstanding, then each preferred share should expect to

receive

in annual dividends.

If Cute Camel has $400,000$ shares of common stock issued and outstanding, then the firm's earnings per share $($EPS$)$ is expected to change

from

in Year $1$ to

in Year $2.$

Cute Camel's before interest, taxes, depreciation and amortization $($EBITDA$)$ value changed from

to $\_,$ in Year $2.$

It is

to say that Cute Camel's net inflows and outflows of cash at the end of Years $1$ and $2$ are equal to the company's annual

contribution to retained earnings. This is because

of the item reported in the income statement involve payments and receipts

of cash.

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