the points for each individual question is shown below. Also, your responses should be rounded to the nearest dollar.

Company A has the current income statement below. Remember to show all your calculations for each question. Assuming a projected increase in sales of 12% annually, a gross profit margin this year of 19.23%, an operating profit margin this year of 16.31% and a called dividend each year of 16% of after tax earnings,

(1) complete the income statement below; (3 points)

(2) prepare two subsequent years of pro formas; (6 points)

(3) what is the gross profit margin for year 2? (1 point)

(4) what is the operating profit margin for year 2? (1 points)

(5) what is the gross profit margin for year 3? (1 point)

(6) what is the operating profit margin for year 3? (1 point)

(7) what is the compound annual growth rate of dividends from year 1 to year 3? (3 points)

(8) What is the growth rate of the company's after tax earnings from year 1 to 3? (3 points)

(9) If the company too 45% of this year's net profits after taxes and invested in a new line of business with anticipated cash flows of $60,000, $65,000, $75,000 and $90,000 over the next four years, assuming a 10% discount rate, what is the projects NPV? (3 points)

(10) Would you recommend the project considered in question 9 above? Why or why not? (1 point)

Income Statement of Company A

Sales Revenue $4,396,223

Less COGS

Fixed Costs

Variable costs (42%)

Gross Profits

Less Operating Expenses

Fixed Expenses

Variable Expenses (2.8%)

Operating Profits

Less Interest Expense (2.7%)

Net Profits before Taxes

Less Taxes (21%)

Net profits after taxes

Less Dividend

Increased Retained Earnings