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MBA540 SLU Strategic Financial Planning Ch12-10 Build A Model Homework please look at the attached problem, you need to know finance to complete this and o

MBA540 SLU Strategic Financial Planning Ch12-10 Build A Model Homework please look at the attached problem, you need to know finance to complete this and only bid if you know how to complete it. Chapter:
Problem:
12
10
Start with the partial model in the file Ch12 P10 Build a Model.xls on the textbook’s Web site, which contains the
2013 financial statements of Zieber Corporation. Forecast Zeiber’s 2014 income statement and balance sheets. Use
the following assumptions: (1) Sales grow by 6%. (2) The ratios of expenses to sales, depreciation to fixed assets,
cash to sales, accounts receivable to sales, and inventories to sales will be the same in 2014 as in 2013. (3) Zeiber
will not issue any new stock or new long-term bonds. (4) The interest rate is 11% for long-term debt and the interest
expense on long-term debt is based on the average balance during the year . (5) No interest is earned on cash. (6)
Dividends grow at an 8% rate. (6) Calculate the additional funds needed (AFN). If new financing is required, assume
it will be raised by drawing on a line of credit with an interest rate of 12%. Assume that any draw on the line of
credit will be made on the last day of the year, so there will be no additional interest expense for the new line of
credit. If surplus funds are available, pay a special dividend.
a. What are the forecasted levels of notes payable and special dividends?
Key Input Data:
Tax rate
Dividend growth rate
Rate on notes payable-term debt, rstd
Rate on long-term debt, rd
Rate on line of credit, rLOC
Used in the
forecast
40%
8%
9%
11%
12%
December 31 Income Statements:
(in thousands of dollars)
Sales
Expenses (excluding depr. & amort.)
Depreciation and Amortization
EBIT
Interest expense on long-term debt
Interest expense on line of credit
EBT
Taxes (40%)
Net Income
Common dividends (regular dividends)
Special dividends
Addition to retained earnings (DRE)
Forecasting
basis
Growth
% of sales
% of fixed assets
2013
Ratios
2014
Inputs
2014
Forecast
2013
Ratios
2014
Inputs
Without adj.
2014
Adj.
2013
$455,150
$386,878
$14,565
$53,708
$11,880 Interest rate x average debt during year
$0
$41,828
$16,731
$25,097
$12,554
Growth
8.00%
$0
$12,543
December 31 Balance Sheets
(in thousands of dollars)
2013
Assets:
Cash
Accounts Receivable
$18,206
$100,133
Forecasting
basis
% of sales
% of sales
Inventories
Total current assets
Fixed assets
Total assets
$45,515
$163,854
$182,060
$345,914
% of sales
Liabilities and equity
Accounts payable
Accruals
Line of credit
Total current liabilities
Long-term debt
Total liabilities
Common stock
Retained Earnings
Total common equity
Total liabilities and equity
$31,861 % of sales
$27,309 % of sales
$0 Previous
$59,170
$120,000 Previous
$179,170
$60,000 Previous
$106,745 Previous + DRE
$166,745
$345,914
% of sales
Increase in spontaneous liabilities (accounts payable and accruals)
+ Increase in long-term bonds, preferred stock and common stock
+ Net income minus regular common dividends
Increase in financing
− Increase in total assets
Amount of deficit or surplus financing:
If deficit in financing (negative), draw on line of credit
If surplus in financing (positive), pay special dividend
a. What are the forecasted levels of the line of credit and special dividends?
Required ine of credit
Special dividends
Note: we copied
b. Now assume that the growth in sales is only 3%. What are the forecasted levels of line of credit and special
dividends?
Required ine of credit
Special dividends
Note: we copied
12/7/2012
With Adj.

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