Baked at Home Cookies expects sales of $672,500 next year. The profit margin is 4.6 percent and the firm has a dividend payout ratio of 15 percent. What is the projected increase in retained earnings?

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The projected increase in retained earnings is $26,294.75. This is calculated as follows:Net income = Sales * Profit margin = $672,500 * 0.046 = $30,935Dividends = Net income * Dividend payout ratio = $30,935 * 0.15 = $4,640.25Retained earnings = Net income - Dividends = $30,935 - $4,640.25 = $26,294.75

Baked at Home Cookies Expects Sales of $672,500 Next Year