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Use the financial statements for The Company to answer the questions that follow. The Company Income Statement and Balance Sheet Year t-1 & Year t (S000s) Year t-1 Year t Year t+1 PERIOD ENDING Revenues Expenses Operating Income Depreciation Interest Pre-tax Income Income Taxes Net Income 7,400,051 7,069,736 7,045,359 6,749,700 354,692 320,036 193,558 190,669 42,662 118,472 49,243 69,229 45,681 83,686 23,948 59,738 292,062 328,060 603,545 546,940 Cash and Securities Accounts receivable Inventories Current assets Fixed assets Goodwill & Intangibles Total Assets Curentlessets2.286.04 2217,320 2,281,704 2,287,320 1,058,789 1,049,505 671,996 4,022,036 4,008,821 681,543 671,996 Short-term borrowings Accounts payable Other Current liabilities Long-term debt Common stock Retained earnings Shareholders' equity 126,745226,370 417,376 520,581455,699 1,062,6761,099,445 608,712 1,481,593 1,482,444 718,220 2.165,038 2,200,664 415,350 794,322 683,445 Liabilities and Equity4,022,036 69,481 1,482,444 4,008,821 Price (in dollars) Shares Outsta 69,481 Prepare pro forma financial statements for The Company. The pro forma statements (income statement and balance sheet) will be for the year ending Year t+1, based on the Year t historic financial statements. Use the percent of sales method based on Year t figures, and make the following assumptions: I. Assume a sales increase of 5%. 2. Taxes are 29% 3. Capital expenditures in Year ttl are forecast to be $190,605 4. The depreciation rate is 15% 5. Dividends are zero in Year t+1. 6. Long-term debt is the plug variable. 7. The following accounts are the same in Year t+1 as in Year t: Goodwill & Intangibles, Common Stock 34 What is the interest expense in Year t+1? A) $35,007 B) $41,417 C)42,662 D) $45,681 E) $48,025 What is Net Income in Year t+1? A) $68,332 B $70,442 c) $71,934 D) $73,852 E) *$77,109 35 36 What are total assets in Year t+1? 4,106,784 4,123,187 B) C) *$4,127,776 D)4,298,762 E) $4,329,346 37 How much more must The Company borrow in Year t+1 than in Year t in order to finance the 5% increase in sales? A) $85,542 B) $96,861 C) $98, 191 D) $103,243 E) $126,370