11. Austin Grocers recently reported the following 2019 income statement (in millions of dollars): Jales Operating costs including depreciation EBIT $700 500 $200 Interest 40 EBT $160 Taxes (40%) Net income 64 $ 96 Dividends Addition to retained earnings $ 32 $ 641 For the coming year, the company is forecasting a 30% increase in sales, and it expects that its year-end operating costs, including depreciation, will equal 80% of sales. Austin's tax rate, interest expense, and dividend payout ratio are all expected to remain constant. 1. What is Austin's projected 2020 net income? 2. What is the expected growth rate in Austin's dividends?

11. Austin Grocers recently reported the following 2019 income statement (in millions of dollars): Jales Operating costs including depreciation EBIT $700 500 $200 Interest 40 EBT $160 Taxes (40%) Net income 64 $ 96 Dividends Addition to retained earnings $ 32 $ 641 For the coming year, the company is forecasting a 30% increase in sales, and it expects that its year-end operating costs, including depreciation, will equal 80% of sales. Austin's tax rate, interest expense, and dividend payout ratio are all expected to remain constant. 1. What is Austin's projected 2020 net income? 2. What is the expected growth rate in Austin's dividends?

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter16: Financial Planning And Control

Section: Chapter Questions

Problem 2PROB

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