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The most recent financial statements for Moose Tours, Inc., appear below. Sales for 2016 are projected to grow by 20 percent. Interest expense will remain constant, the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. MOOSE TOURS, INC 2015 Income Statement Sales Costs Other expenses $763,000 598,000 19,000 Earnings before interest and taxes Interest expense $146,000 10,000 Taxable income Taxes (35%) $136,000 47,600 Net income $ 88,400 Dividends Addition to retained earnings $21,760 66,640 MOOSE TOURS, INC Balance Sheet as of December 31, 2015 Assets Liabilities and Owners Equity Current assets Current liabilities $ 56,400 Cash Accounts receivable S 22,240 Accounts payable 34,560 Notes payable 71,520 15,600 $72,000 $146,000 Total Total S 128,320 Long-tem debt Owners equity Common stock and paid-in surplus Fixed assets Net plant and equipment S420,000 $132,000 198,320 $330,320 $548,320 Total Total assets S 548,320 Total liabilities and owners equity What is the EFN if the firm was operating at only 80 percent of capacity in 2015? Assume that fixed assets are sold so that the company has a 100 percent asset utilization. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

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please find the answer attached in excel images below:

in the solution

I have used percent of sales method to calculate assets and accounts payable for year 2016(projected year)

and the long term debt and owners' equity will remain the same for the projected year.

in the percent of sales method , proportion of the asset of current year sales is multiplied with new projected sales to get the value of that asset on the projected year . The same process if followed for all assets and accounts payable

1 Income statement 2 sales 3 costs 4 other expenses 2015 763000 598000 2016 915600 717600 sales growth rate dividend payout ratio operating capacity full capacity sales 0.2 0.246154 0.8 953750 6 Earnings before interest and taxes 146000 7 Interest expense 8 Taxable Income 9 Taxes(35% 10 11 Net income 12 Dividends 13 addition to retained earnings 14 Balance sheet 15 Assets 16 current assets 17 cash 18 accounts receivable 19 invento 20 total 21 fixed assets 22 net plant & equipment 23 175200 full capacity ratio total fixed assets 0.44036 10000 136000 47600 403200 163200 57120 EFN 108048 106080 26112 79968 2016 21760 2015 2015 2016 Liabilities & owners equi current liabilities 26688 accounts payable 41472 notes payable 85824 22240 56400 67680 1560015600 71520 128320 153984 total 72000 83280 146000 146000 long term debt 420000 owners equity common stock and paid-in surplus retained earnings total 132000 132000 198320 278288 330320 410288 548320 639568 25 27 total assets 548320 657984|Total liabilities & owners equity

1 Income statement 2 sales 3 costs 4 other expenses 2015 763000 598000 19000 2016 B2 (1+F1) (B3/B2)*C2 (B4/B2)*C2 sales growth rate dividend payout ratio B12/B11 operating capacity 0.8 full capacity sales B2/F3 0.2 full capacity ratio total fixed assets B22/F4 6 Earnings before interest and taxes 146000 7 Interest expense 8 Taxable Income 9 Taxes(35%) 10 11 Net income 12 Dividends 13 addition to retained earnings 14 Balance sheet 15 Assets 16 current assets 17 cash 18 accounts receivable 19 invento 20 total 21 fixed assets 22 net plant & equipment 23 24 25 26 27 total assets C2-C3-C4 10000 -B6-B7 -B8 0.35 -C6-C7 -C8 0.35 EFN -(B20+F7)-F27 -B8-B9 21760 66640 2015 (B12/B11) C11 -C11-C12 2016 2015 2016 Liabilities & owners equit current liabilities (B17/B2) C2 accounts payable (B18/B2)*Cotes payable (B19/B2)C2 C17+C18+C19 total E17/B2)*C2 E18 22240 34560 71520 -B17+B18+B19 56400 15600 -E17+E18 146000 F17+F18 E21 long term debt 420000 -(B22/B2) C2 owners equity common stock and paid-in surplus 132000 retained earnings total Total liabilities&ownersequityE 198320 -E24+E25 -E26+E20+E21 E24 E25+C13 F24+F25 F26+F20+F21 -B20+B22 C20+C22

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