Question

The most recent financial statements for Moose Tours, Inc., follow. Sales for 2017 are projected to grow by 15 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, and accounts payable increase spontaneously with sales.

MOOSE TOURS, INC. 2016 Income Statement
Sales			$	995,000
Costs				(782,000	)
Other expenses				(15,000	)
Earnings before interest and taxes			$	198,000
Interest paid				(21,670	)
Taxable income			$	176,330
Taxes (35%)				(61,716	)
Net income			$	114,615
Dividends	$	45,700
Addition to retained earnings		68,915

MOOSE TOURS, INC. Balance Sheet as of December 31, 2016
Assets			Liabilities and Owners’ Equity
Current assets			Current liabilities
Cash	$	27,500	Accounts payable	$	71,500
Accounts receivable		47,300	Notes payable		9,900
Inventory		83,600	Total	$	81,400
Total	$	158,400	Long-term debt	$	171,600
Fixed assets			Owners’ equity
			Common stock and paid-in surplus	$	23,100
Net plant and equipment	$	400,400	Retained earnings		282,700
			Total	$	305,800
Total assets	$	558,800	Total liabilities and owners’ equity	$	558,800

Suppose the firm was operating at only 90 percent capacity in 2017. What is the EFN now? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to the nearest whole number.)

Answer 1