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Business, 14.04.2020 17:29 Tooey2331

Start with the partial model in the file Ch12 P10 Build a Model. xlsx on the textbook’s Web site, which contains the 2019 financial statements of Zieber Corporation. Forecast Zeiber's 2020 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 2020 as in 2019. (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) Regular dividends grow at an 8% rate. (7) The tax rate is 25%. 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.

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Start with the partial model in the file Ch12 P10 Build a Model. xlsx on the textbook’s Web site, wh...
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