19. (7 points total) Pro Forma Financial Statements ill and calculate 2006 (estimated) Return On Equity (ROE) after all financing adjustments for AFN are considered. Use the Percentage of Sales Method to calculate LzRz's Additional Funds Nceded (AFN) for 2006. Prepare 2006 LzRz Management's financing (Financing Feedback Effects) decisions Financial Statements for LzRz Corporation for2005 are illustrated below. L2Rzexpectssal togross1% in2006 Costs will increase in proportion to Sales for 2006. In 2005, LzRz operated at full capacity Wit reed to tilized Fixed 5, Undental asset items except Fixed Assets, which were utilized at only 85 % of capacity in 200 Assets cannot be sold. Current Asscts and Spontancous L.iabilities will incrcase in proportion to Sales in 2006. LzRz plans to finance any AFN with Notes Payable, (Round all numbers/calculations to nearest whole dollar) Forecast 2006 2005 Basis 50 Sales Operating Costs EBIT Interest EBT Taxes (40%) Net income s 55,000 45.650 S 9,350 1.07 $ 8,241 Dividends (80%) Addition to RE $ S 3,956 989 Forecast Basis 2006 2nd 1st 2005 2006 Sales Additions AFN Pass S 2,750 Cash Receivables Inventories Total CA Net Fixed Assets -28.000 Total Assets 66,500 19,250 3S S 38,500 ino Accounts Payable $11,000 L Notes Payable 500 500 $ 15,350 Total CL Long Term Debt Total CL +LTD 20,350 Common stock 10,000 Retained earnings 36,150 Total L&OE 66,500 2006 Pro Forma ROE- % (estimated 2006 Return On Equity to nearest 0.1 %)