A. What is the Discretionary Financing Needed (DFN) in 2022? Is this a surplus or defecit?

B. Assume the DFN will be absorbed by Additional Notes Payable, if there is a defecit. If there is a DFN surplus, assume that Notes Payable will remain at the 2021 level and that the firm will keep excess funds as extra cash. (Set up a worksheet to make the balance sheet balances). Check by changing investment to fixed assets whether balance sheet balances at various levels of the investment into fixed assets.

Plastic 5p0rts,Inc.a regional recycled plastic sport equipment retailer and repair shop, plans a capital expenditure of $1,500,000 in 2022. Prepare a 2022 Pro Forma income Statement and a 2022 Pro Forma Ealance sheet using the data from the 2021 and 2020 financial statements to find out whether Plastic Sports needs to bortow additional funds to finance the planned expenditure. USE THE PLUG METHOD (Znd method used in class) The 2020 and 2021 statements are given on the next worksheets. Use N of sales method and the following aswumptions to create the pro-formas: 1 The fitm has forecasted sales growth of 14%-that is, sales in 2022 are expected 14 higher than in 2021 2 The cost of goodi sold (COos) in 2022 is expected to change with sales at rate of 70.0W of sales due to a new cont saving mechanical production process 3 The sellirg and 68A expenses in 2022 are expected to change with sales at a rate of 10% based on estimates that take the new production process into consideration. 4 Depreciation wili increase dve to a new capital investment deseribed in point seven below. 5. The tak rate is expected at 22% in line with the previous two years 6 Cash, atcounts receivable, inventery, accounts payable, and accrued expenses are expected to change with sales at rates of 3%,11%,13.5%. 7. and 1.5% of sales reipectively. 7 The firm plans an investment of 51,000,000 in a repair equipenent in 2022. The equipment has an estimated useful life of 10 years and no sakage value. This equigment win be depreciated using the straight line depreciation method. There are no other additional capital expenditures planned for 2022. 8 Foued expense, Notes Payable, Long Term Debt, Common Stock and Additional Paid-in Capital will remain at their 2021 levels in 2022. 7 Assume the firm pays 15N interest on short-term debt and 9% on lons teren debt. 10 The macagement would like to increase the dividend per share by 25 cents compared to 2021 Plastic Sports, Inc. Income Statement In thousands of dollars Balance Sheet In thousands of dollars