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Posted on Sep 10, 2024

31 You are responsible for developing a model that analyzes the potential investment, providing valuations of alternate strategies and a sensitivity analysis of the results.

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31 You are responsible for developing a model that analyzes the potential investment, providing valuations of alternate strategies and a sensitivity analysis of the results. 32 The following model should include only the incremental impact on the Income Statement, Balance Sheet and Cash Flow Statement. 33 Please enter formula in the yellow boxes below to develop the model. 34 35 2021 2022 2023 2024 2025 2026 Hints 36 Income Statement 37 Finished Goods Expense 220,000 220,000 220,000 220,000 220,000 Shown as positive because it is an expense that will cease to exist 38 Depreciation (60,000) (60,000) (60,000) (60,000) (60,000) 39 Labor (110,000) (110,000) (110,000) (110,000) (110,000) 40 Overhead (10,000) (10,000) (10,000) (10,000) (10,000) 41 EBIT 40,000 40,000 40,000 40,000 40,000 42 Interest Income (5% interest rate) Interest Income is based on a 5% interest rate applied to prior year Net Cash (Cash minus Debt) 43 Pretax 40,000 40,000 40,000 40,000 40,000 44 Tax (30%tax rate) 12,000 12.000 12.000 12,000 12,000 45 Net Income 28,000 28,000 28,000 28,000 28,000 46 47 Balance Sheet (change in account) 48 Cash (150,000) Cash is equal to that of the previous year plus Cash Generated 49 PP&E 300,000 PP&E is equal to that of the previous year plus CapEx. (However, CapEx is shown as a negative on the Cash Flow Statement so remember to change the sign to make i 50 Debt 150,000 Debt is equal to that of the previous year plus Issues (Retirement) of Debt 51 Equity Equity is equal to that of the previous year plus Net Income (there are no Dividends) 52 53 Cash Flow Statement 54 Net Income Net Income from the Income Statement 55 Depreciation Investment Required spread of the useful life (5 years) 56 Cash Flow from Operations 57 Capex (300,000) 0 0 o 0 0 58 Cash Flow from Investing (300,000) 59 Issues (Retirement) Debt 150,000 Debt based on Percent Debt Financed with 1/5th retired each year. Must be a formula based on D50 enabling changed assumptions of percent debt financed. 60 Cash Flow from Financing 150,000 61 Cash Generated (150,000) 31 You are responsible for developing a model that analyzes the potential investment, providing valuations of alternate strategies and a sensitivity analysis of the results. 32 The following model should include only the incremental impact on the Income Statement, Balance Sheet and Cash Flow Statement. 33 Please enter formula in the yellow boxes below to develop the model. 34 35 2021 2022 2023 2024 2025 2026 Hints 36 Income Statement 37 Finished Goods Expense 220,000 220,000 220,000 220,000 220,000 Shown as positive because it is an expense that will cease to exist 38 Depreciation (60,000) (60,000) (60,000) (60,000) (60,000) 39 Labor (110,000) (110,000) (110,000) (110,000) (110,000) 40 Overhead (10,000) (10,000) (10,000) (10,000) (10,000) 41 EBIT 40,000 40,000 40,000 40,000 40,000 42 Interest Income (5% interest rate) Interest Income is based on a 5% interest rate applied to prior year Net Cash (Cash minus Debt) 43 Pretax 40,000 40,000 40,000 40,000 40,000 44 Tax (30%tax rate) 12,000 12.000 12.000 12,000 12,000 45 Net Income 28,000 28,000 28,000 28,000 28,000 46 47 Balance Sheet (change in account) 48 Cash (150,000) Cash is equal to that of the previous year plus Cash Generated 49 PP&E 300,000 PP&E is equal to that of the previous year plus CapEx. (However, CapEx is shown as a negative on the Cash Flow Statement so remember to change the sign to make i 50 Debt 150,000 Debt is equal to that of the previous year plus Issues (Retirement) of Debt 51 Equity Equity is equal to that of the previous year plus Net Income (there are no Dividends) 52 53 Cash Flow Statement 54 Net Income Net Income from the Income Statement 55 Depreciation Investment Required spread of the useful life (5 years) 56 Cash Flow from Operations 57 Capex (300,000) 0 0 o 0 0 58 Cash Flow from Investing (300,000) 59 Issues (Retirement) Debt 150,000 Debt based on Percent Debt Financed with 1/5th retired each year. Must be a formula based on D50 enabling changed assumptions of percent debt financed. 60 Cash Flow from Financing 150,000 61 Cash Generated (150,000)