Question
A company is forecasting its next year's financials and will calculate a loan plug. Outside of this loan plug, the company will have no other
A company is forecasting its next year's financials and will calculate a loan plug. Outside of this loan plug, the company will have no other debt and will carry negligible cash. All other assets are forecasted to be $13,215, while all other liabilities are forecasted to be $4,084. Beginning retained earnings for the forecast year will be $1,774. All equity items other than the retained earnings balance will be $1,498. Earnings before interest and taxes are estimated to be $4,071. If the forecasted interest rate charged on the loan is 4.82% and the income tax rate remains at 30%, what is the absolute value of the forecasted loan as a plug? Assume the company pays no dividends.
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