1. Please start with the data in the prior problem concerning New Madrid Corporation. In projecting the proforma second years income statement for New Madrid, assume that sales increase by 20% in the second year of operation, variable costs of goods sold stay at 20% of sales, fixed cost of sales increase by 10% over the second year, selling and administrative cost increase by 5% and taxes remain at 30% of pretax profit. Please calculate New Madrid Corporations projected after-tax income for the second year of operation.

2. Caruthersville Corporation begins the year with $800,000 in plant property and equipment. This equipment is depreciated by $40,000 over the coming year. Over this same year, Caruthersville purchases additional equipment worth $70,000. What is the ending balance of the plant property and equipment account at the end of the year?