1 What is the forecasted value of Net Income for 2020? Express the numerical terms of your answer completely. For example: If your answer is one million dollars, write: 1000000."

2- "Before making additional balancing adjustments to the Balance Sheet, what is the forecasted value of Cash and Equivalents for 2020? Express the numerical terms of your answer completely. For example: If your answer is one million dollars, write: 1000000."

3- Before making additional balancing adjustments to the Balance Sheet, what is the forecasted value of Property, Plant and Equipment for 2020? Express the numerical terms of your answer completely. For example: If your answer is one million dollars, write: 1000000."

4- Before making additional balancing adjustments to the Balance Sheet, what is the forecasted value of Total Assets for 2020? Express the numerical terms of your answer completely. For example: If your answer is one million dollars, write: 1000000."

"PARTI: Use the following information on Company Y and perform pro-forma financial modeling using a planned expansion method to answers the following questions. To do this assume that the percentage values with respect to sales of the 2020 (i) costs except depreciation, (ii) cash and equivalents, (iii) accounts receivable, (iv) inventories, and (v) accounts payable will remain fixed at their respective percentage values in 2019. Assume also that income tax will remain at 30% of the Pretax () Income. Company Y sells a product for which in 2019 the total market size was of 1,000,000 units, of which Company Y owned a share of 30%. Both, the total market size and Company Ys market share are expected to grow at a 15% yearly rate for the next five years. The price of the product is $114 in 2019 and is expected to remain at that price for the next years. TABLE B.1 2019 Market Analysis 2020 2021 2022 Market Size 1,000,000 1,150,000 1,322,500 1,520,875 Market Share 30.000% 34.500% 39.675% 45.626% Production Volume 300,000 Average Sales Price: 114 Sales In 2019, the outstanding debt of Company Y is $500,000, for which the company makes yearly interest payments of 10%. The executives of Company Y are considering making a significant capital investment in 2020 of $2,000,000 to purchase new machinery. The company plans to finance this investment with a 30- year loan that makes yearly interest payments equivalent to 8% of its principal. The principal is paid when the loan matures. The following table summarizes the debt and interest payment of Company Y. 2019 Debt and Interest Table TABLE B.2 2020 2021 500,000 500,000 2,500,000 Outstanding Debt New Net Borrowing 2,000,000 Interest on Debt Currently, Company Y makes yearly expenditures on replacement capital investment of $50,000. If the company makes the planned expansion, it has been decided that it will continue making replacement capital investment of $50,000 until and including 2020; and starting in 2021 it will perform yearly expenditures on replacement capital investment of $200,000. The current and the planned expenditures on replacement of capital investment will be financed by the companys cash flow. The following table indicates for 2019 Company Y s values of i. opening book value, ii. capital investment, iii. depreciation, and iv. closing book value. The Table also indicates the 2020-2021 forecast values of capital depreciation if the planned expansion were to occur in 2020. Because no decision has yet been done about dividends, before making any balancing adjustments to the Balance Sheet, assume that these will be $0 in 2020. TABLE B.3 2019 Fixed Assets & Capital Investment 2020 2021 Opening Book Value 1,000,000 Capital Investment 50,000 Depreciation -105,000 -299,500 -289,550 Closing Book Value 945,000 The following table contains Company Y s income statement for 2019. TABLE B.4 Income Statement: 2019 2020 Sales 34,200,000 Costs except Depr. -2,736,000 EBITDA 31,464,000 Depreciation -105,000 EBIT 31,359,000 Interest Expense (net) -50,000 Pretax Income 31,309,000 Income Tax -9,392,700 Net Income 21,916,300 Balance Sheet - Assets: TABLE B.5 2019 2020 Assets Cash and Equivalents 11,970,000 Accounts Receivable 10,260,000 Inventories 3,420,000 Total Current Assets 25,650,000 Property, Plant and Equipment 945,000 Total Assets 26,595,000 Balance Sheet - Liabilities and Equity: 2019 2020 Liabilities Accounts Payable 10,260,000 Total Current Liabilities 10,260,000 Debt 500,000 Total Liabilities 10,760,000 Stockholders' Equity Starting Stockholders' Equity 1,000,000 Net Income 21,916,300 Dividends -7,081,300 15,835,000 Stockholders' Equity Total Liabilities and Equity 26,595,000 "PARTI: Use the following information on Company Y and perform pro-forma financial modeling using a planned expansion method to answers the following questions. To do this assume that the percentage values with respect to sales of the 2020 (i) costs except depreciation, (ii) cash and equivalents, (iii) accounts receivable, (iv) inventories, and (v) accounts payable will remain fixed at their respective percentage values in 2019. Assume also that income tax will remain at 30% of the Pretax () Income. Company Y sells a product for which in 2019 the total market size was of 1,000,000 units, of which Company Y owned a share of 30%. Both, the total market size and Company Ys market share are expected to grow at a 15% yearly rate for the next five years. The price of the product is $114 in 2019 and is expected to remain at that price for the next years. TABLE B.1 2019 Market Analysis 2020 2021 2022 Market Size 1,000,000 1,150,000 1,322,500 1,520,875 Market Share 30.000% 34.500% 39.675% 45.626% Production Volume 300,000 Average Sales Price: 114 Sales In 2019, the outstanding debt of Company Y is $500,000, for which the company makes yearly interest payments of 10%. The executives of Company Y are considering making a significant capital investment in 2020 of $2,000,000 to purchase new machinery. The company plans to finance this investment with a 30- year loan that makes yearly interest payments equivalent to 8% of its principal. The principal is paid when the loan matures. The following table summarizes the debt and interest payment of Company Y. 2019 Debt and Interest Table TABLE B.2 2020 2021 500,000 500,000 2,500,000 Outstanding Debt New Net Borrowing 2,000,000 Interest on Debt Currently, Company Y makes yearly expenditures on replacement capital investment of $50,000. If the company makes the planned expansion, it has been decided that it will continue making replacement capital investment of $50,000 until and including 2020; and starting in 2021 it will perform yearly expenditures on replacement capital investment of $200,000. The current and the planned expenditures on replacement of capital investment will be financed by the companys cash flow. The following table indicates for 2019 Company Y s values of i. opening book value, ii. capital investment, iii. depreciation, and iv. closing book value. The Table also indicates the 2020-2021 forecast values of capital depreciation if the planned expansion were to occur in 2020. Because no decision has yet been done about dividends, before making any balancing adjustments to the Balance Sheet, assume that these will be $0 in 2020. TABLE B.3 2019 Fixed Assets & Capital Investment 2020 2021 Opening Book Value 1,000,000 Capital Investment 50,000 Depreciation -105,000 -299,500 -289,550 Closing Book Value 945,000 The following table contains Company Y s income statement for 2019. TABLE B.4 Income Statement: 2019 2020 Sales 34,200,000 Costs except Depr. -2,736,000 EBITDA 31,464,000 Depreciation -105,000 EBIT 31,359,000 Interest Expense (net) -50,000 Pretax Income 31,309,000 Income Tax -9,392,700 Net Income 21,916,300 Balance Sheet - Assets: TABLE B.5 2019 2020 Assets Cash and Equivalents 11,970,000 Accounts Receivable 10,260,000 Inventories 3,420,000 Total Current Assets 25,650,000 Property, Plant and Equipment 945,000 Total Assets 26,595,000 Balance Sheet - Liabilities and Equity: 2019 2020 Liabilities Accounts Payable 10,260,000 Total Current Liabilities 10,260,000 Debt 500,000 Total Liabilities 10,760,000 Stockholders' Equity Starting Stockholders' Equity 1,000,000 Net Income 21,916,300 Dividends -7,081,300 15,835,000 Stockholders' Equity Total Liabilities and Equity 26,595,000