12. Returning to Checkpay. I upon only the first $100 allowed to borrow m the third year to meet his bank loan is paid in the J. OI IUDIS m a ternents to balance.) Ignore additional Interest expense. Checkpay, Inc, Johnny nas discovered that his original projections of expenses were based The first $100,000 of loans. Assuming that the interest rate is 10 percent and that Johnny is horrow more money as it is needed, how much will he have needed to borrow by the end of Sear to meet his growth goals and to pay the interest? You may assume that the interest on the is paid in the year following the loan and is based upon the previous year's ending balance of Hint: This requires that each year's income statement be revised to add an interest expense 10 percent of the previous year's ending bank loan amount more than $100,000) to the original projections. This will cause the equity account to become negative. We have done the first caments to help get you started. The bank loan amount was entered last so as to cause the column to lequal to 10 percent of the p expense projections. This sum to the last line) Checkpay, Inc. - Statement of Cash Flows for Year 1 Operating Activities Net income -$ 70 Investing Activity None Financing Activities Bank loan $ 90 100 Change in Net Working Capital $20 Checkpay, Inc. - Forecasted Condensed Balance Sheet, End of Year 1 Net working capital $ 120 Fixed assets Total Assets $ 220 Bank loan $ 190 Equity Total Debt and Equity $ 220 Checkpay, Inc. - Forecasted Income Statement, Year 2 Revenues $ 200 Original expenses 230 Additional interest expense 9 Net income or loss S-39 13. Perform a rough financial analysis of the debt usage, liquidity, and profitability of Checkpay, Inc. How would you suggest that Johnny revise his plans in order to provide for a more reasonable financial future