1) Prepare a pro forma income statement for 2017. What is the expected net income?

2) What are the expected dividends for 2017?

Problem 1 A late penalty of 10% will apply to new answers. Intro Income statement for 2016 (in $) 2016 Sales 380,000 Operating costs 190,000 Depreciation 76,000 EBIT 114,000 Interest 25,000 Taxes (28%) 24,920 Net income 64,080 Dividends 38,448 Sales and depreciation are expected to increase by 30% in 2017, while costs (excluding depreciation) are expected to reach 45% of sales. Interest expenses, the average tax rate and the dividend payout ratio are expected to stay constant