Year 3

Year 2

Year 1

Sales                                                   

$120,000

$90,000

$100,000

Cost of goods sold                                        

(55,000)

(47,000)

(48,000)

Operating expenses:

Marketing expense                                      

(7,000)

(7,000)

(6,000)

R&D expense                                          

(15,000)

(4,000)

(10,000)

Administrative expense                                   

(20,000)

(22,000)

(20,000)

Operating income                                         

 $ 23,000

 $10,000

 $ 16,000

Interest expense                                          

(3,000)

(5,000)

(3,000)

Income before income taxes                                 

 $ 20,000

 $ 5,000

 $ 13,000

Income tax expense                                       

(8,000)

(2,000)

(5,000)

Net income                                        

 $ 12,000

 $ 3,000

 $ 8,000