Austin Grocers recently reported the following 2021 income statement (in millions of dollars):

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.

a. What is Austin’s projected 2022 net income?

b. What is the expected growth rate in Austin’s dividends?

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Sales Operating costs including depreciation EBIT Interest EBT Taxes (25%) Net income Dividends Addition to retained earnings $700 500 $200 40 $160 40 $120 $ 40 $ 80