1. Financial Planning of the firm (a) What is the purpose preparing the pro-forma financial statement? (b) The marketing department of Zetora Manufacturing estimates that its sales in 2019 will be $1,500,000. Interest expense is expected to remain unchanged at $36,000, and the firm plans to pay $70,000 in cash dividends during 2019. Table 1: Zetora Manufacturing Income Statement for the Year Ended December 31, 2018 Given the information above, use the percentage of sales method to prepare a pro forma income statement for the year ended December 31, 2019 (Similar to Table 4.15 in Section 4.5). (c) Discuss a weakness of the approach used in (b) and make some suggestion on how to improve the forecast. Assume that the relationship holds and the forecast of sales might not be accurate, can have some scenarios analysis 2. Time Value of Money Problem Instruction: Use the spreadsheet or the financial calculator to find the answer, clearly indicate the input values similar to the examples shown in the textbook/PPT. (a) Jason has inherited $150,000 from his Grandma. He would like to use this money to buy his mom a new car that will cost $180,000, three years from now. Will Jason have enough money to buy the car if he deposits his money in a banking paying 6 percent annually? (Show the calculation to support your answer) (b) Robert is going to retire in 10 years, he plans to fund his individual retirement account (IRA) with the contribution of $2,000 at the end of each year for the next 10 years. If Robert can eam 12 percent on his investment, how much will he have at the end of the tenth year when he retires? (c) Beth will receive $15,000 per year for the next 10 years as royalty for her work on a finance book. What is the present value of her royalty income if the discount rate is 10 percent? 3. Bond valuation Instruction: Use the spreadsheet or the financial calculator to find the answer, clearly indicate the input values similar to the examples shown in the textbook/PPT. A Corporation has a bond issue outstanding at the end of 2020 . The bond has 10 years remaining to maturity and carries a coupon rate of 5%. Interest on the bond is compounded on an annual basis. The par value of the bond is $1,000, and if the required rate of return on the bond is 6% now. (a) Calculate the price of the bond. (b) If the Federal Reserve further increases interest rate, and the bond's required rate of return increases to 7% now, what will happen to the bond price? Recalculate the bond price in this case. (c) If you are portfolio manager holding a portfolio of bonds and you expect interest rates to increase in the future, what you can do to protect the value of your bond portfolio