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What is the forecasted addition to retained earnings

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Question - Kenney Corp. recently reported the following income statement for 20x1 (the numbers are in millions of dollars):

Sales: $7,000;

O&M: $3,000;

EBIT: $4,000;

Interest: $200;

EBT: $3,800;

Taxes 40%: 1,520;

Net income available to common shareholders: $2,280.

The company forecasts that its sales will increase by 10% in 20x2 and its O&M will increase in proportion to its sales. The company's interest expense is expected to remain at $200 million and the tax rate will remain at 40%. The company plans to pay out 50% of its net income as dividends, the other 50% will be added to retained earnings.

Required - What is the forecasted addition to retained earnings for 20x2 (in millions)?

Reference no: EM133041563

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