It was shown earlier in the chapter that Westland Industries was suffering from cash flow insolvency in terms of its earnings before interest, taxes, and depreciation (EBITDA). Two scenarios are possible for Westland in Year 3. Scenario 1 suggests that the results from operations for Year 2 are expected to be repeated in Year 3 and thereafter. In scenario 2, Westland is expected to have a breakout year in terms of sales of $400,000 and operating expenses before depreciation of 60 percent of sales. Interest is expected to remain at $40,000 because of the need to finance the venture’s growth. Prepare basic income statements (from sales to EBIT) under both scenarios. Comment on your findings.