What is the expected growth rate in Austin dividends

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Reference no: EM132806208

Problem - PRO FORMA INCOME STATEMENT

Austin Grocers recently reported the following 2018 income statement (in millions of dollars):

Sales $700

Operating costs including depreciation 500

EBIT $200

Interest 40

EBT $160

Taxes (40%) 64

Net income $ 96

Dividends $ 32

Addition to retained earnings $ 64

For the coming year, the company is forecasting a 25% increase in sales, and it expects that its year-end operating costs, including depreciation, will equal 70% of sales. Austin's tax rate, interest expense, and dividend payout ratio are all expected to remain constant.

Required -

a. What is Austin's projected 2019 net income?

b. What is the expected growth rate in Austin's dividends?

Reference no: EM132806208

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