Roger Lovrenich of Lovrenich Motor Electronics has spent hiscareer building his

Roger Lovrenich of Lovrenich Motor Electronics has spent hiscareer building his company and invested all profits back into thecompany. He now realizes that he needs to plan for his retirementin 5 years and has little retirement funds beyond social securityand his company. His plan is to milk as much net earnings out ofthe company for five years and then sell it. To do this he willprogressively reduce S.G&A. expenses. He expects no change inthe % for cost of goods sold nor in working capital. The companywill be sold in year 5 and this should be considered the salvagevalue. Capital Gains tax in his state is 15%.