Eastern Fuel Producers Inc. Income Statement for the Year Ending on December 31 (Millions of dollars)...
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Eastern Fuel Producers Inc. Income Statement for the Year Ending on December 31 (Millions of dollars) Net sales Operating costs, except depreciation Depreciation Total operating costs Operating income (or EBIT) Less: Interest Earnings before taxes (EBT) Less: Taxes (40%) Net income available to shareholders Year 1 $2,000 1,600 80 1,680 320 32 288 115 173 The firm's CEO would like sales to increase by 25% next year. Assume that (1) the operating costs (excluding depreciation) remain at 80% of sales, (2) depreciation remains at 4% of sales, and (3) the interest cost increases from 10% to 15% of earnings before interest and taxes (EBIT). The tax rate of 40% also remains the same. What will be the company's earnings before interest and taxes in the second year? Eastern Fuel Producers Inc. Income Statement for the Year Ending on December 31 (Millions of dollars) Net sales Operating costs, except depreciation Depreciation Total operating costs Operating income (or EBIT) Less: Interest Earnings before taxes (EBT) Less: Taxes (40%) Net income available to shareholders Year 1 $2,000 1,600 80 1,680 320 32 288 115 173 The firm's CEO would like sales to increase by 25% next year. Assume that (1) the operating costs (excluding depreciation) remain at 80% of sales, (2) depreciation remains at 4% of sales, and (3) the interest cost increases from 10% to 15% of earnings before interest and taxes (EBIT). The tax rate of 40% also remains the same. What will be the company's earnings before interest and taxes in the second year?
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