Miller's Hardware Has Current Sales of $42,700, EBIT of $9,700

Multiple Choice

Miller's Hardware has current sales of $42,700, EBIT of $9,700, net income of $6,600, interest expense of $1,360, and dividends paid of $1,925. Assume the profit margin, debt-equity ratio, and dividend payout ratio are held constant. Sales are expected to increase by $8,000 next year. What is the projected change to retained earnings for next year?

A) $5,575
B) $4,994
C) $4,909
D) $5,551
E) $5,386