Under the assumption that Ideko's market share will increase by 0.55 percent per year, you project the following investment and depreciation:

Under the assumption that? Ideko’s market share will increase by 0.55 percent per? year, you project the following investment and? depreciation:

2005 2006 2007 2008 2009 2010

New Investment 4,950 4,950 4,950 4,950 4,950 19,250

Depreciation (5,430) (5,382) (5,339) (5,300) (5,265) (6,663)

Using this information and the information here project net income through 2010. Assume the corporate tax rate is 35%. ?Ideko’s income statement for 2005 is shown here

Growth

2005

2006

2007

2008

2009

2010

Sales Data

Market Size (000 units)

4.90%

10000

10490

11004

11543

12109

12702

Market Share

0.55%

10.15%

10.70%

11.25%

11.80%

12.35%

12.90%

Average Sales Price ($/unit)

2.15%

74.02

75.61

77.24

78.9

80.59

82.33

Cost of Goods Data

Raw Materials ($/unit)

1.15%

16.17

16.36

16.54

16.73

16.93

17.12

Direct Labor Costs ($/unit)

4.15%

18.11

18.86

19.64

20.46

21.31

22.19

Operating Expense Data

Sales and Marketing (% sales)

15.16

16.61

18.06

19.51

19.96

Administrative (% sales)

18.11

15.11

14.11

13.11

Interest on Term Loan ($ 000)

(78)

(6,755)

Estimated 2005 Income Statement

Income Statement ($ 000)

Sales

75130

Cost of Goods Sold

Raw Materials

(16,413)

Direct Labor Costs

(18,382)

Gross Profit

40335

Sales and Marketing

(11,390)

Administrative

(13,606)

EBITDA

15339

Depreciation

(5,430)

EBIT

9909

Interest Expense (net)

(78)

Pretax Income

9831

Income Tax

(3,441)

Net Income

6390

To build the pro forma income? statement, we begin with? Ideko’s sales.??(Round to the nearest? $ 000.)

Income Statement ($ 000)

2005

2006

2007

2008

2009

2010

Sales

75,130

The next items in the income statement detail the cost of goods sold.???(Round to the nearest? $ 000.)

Income Statement ($ 000)

2005

2006

2007

2008

2009

2010

Raw Materials

(16,413)

The same method can be applied to determine the direct labor costs.???(Round to the nearest? $ 000.)

Income Statement ($ 000)

2005

2006

2007

2008

2009

2010

Direct Labor Costs

(18,382)

Gross profit is calculated next.???(Round to the nearest? $ 000.)

Income Statement ($ 000)

2005

2006

2007

2008

2009

2010

Gross Profit

40,335

Sales, marketing, and administrative costs can be computed directly as a percentage of sales.???(Round to the nearest? $ 000.)

Income Statement ($ 000)

2005

2006

2007

2008

2009

2010

Sales and Marketing

(11,390)

Income Statement ($ 000)

2005

2006

2007

2008

2009

2010

Administrative

(13,606)

Next, we can project EBITDA over the next five years.???(Round to the nearest? $ 000.)

Income Statement ($ 000)

2005

2006

2007

2008

2009

2010

EBITDA

15,339

Next, we arrive at? Ideko’s earnings before interest and taxes.???(Round to the nearest? $ 000.)

Income Statement ($ 000)

2005

2006

2007

2008

2009

2010

EBIT

9,909

Next, we deduct interest expenses.???(Round to the nearest? $ 000.)

Income Statement ($ 000)

2005

2006

2007

2008

2009

2010

Pretax Income

9,831

The final expense is the corporate income tax.???(Round to the nearest? $ 000.)

Income Statement ($ 000)

2005

2006

2007

2008

2009

2010

Income Tax

(3,441)

After income? taxes, we are left with? Ideko’s projected pro forma net income as the bottom line.???(Round to the nearest? $ 000.)

Income Statement ($ 000)

2005

2006

2007

2008

2009

2010

Net Income

6,390

Under the assumption that Ideko’s market share will increase by 0.55 percent per year, you project the following investment and depreciation: