B F G H M N 5 0 Widget Products International Sales Cost of Goods Sold Gross Profit Selling and G&A Expenses Fixed Expenses Depreciation Expense EBIT Interest Expense Earnings Before Taxes Taxes Net Income Forecast 2022 2021 2020 $4,300,000 $3,850,000 $3,432,000 $3,609,108 $3,250,000 $2,864,000 $690,892 $600,000 $568,000 $334,803 $330,300 $240,000 $100,000 $100,000 $100,000 $25,000 $20,000 $18,900 $231,090 $149,700 $209, 100 $76,000 $76,000 $62,500 $155,090 $73,700 $146,600 $62,036 $29,480 $58,640 $93,054 $44,220 $87,960 Utilize the iterative process to calculate the required level of "Long Term Debt" needed to eliminate the Discretionary Financing Need 7 8 9 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 Notes: Tax Rate Additional Depreciation Interest Rate 40.00% 40.00% $5,000 11.70% Widget Products International 2022 2021 2020 Assets Cash and Equivalents $75,000 $70,000 $60,000 Accounts Receivable $444,505 $402,000 $351,200 Inventory $914,899 $836,000 $715,200 Total Current Assets $1,434,404 $1,308,000 $1,126,400 Plant & Equipment $577,000 $527,000 $491,000 Accumulated Depreciation $191,200 $166,200 $146,200 Net Fixed Assets $385,800 $360,800 $344,800 Total Assets $1,820,204 $1,668,800 $1,471,200 Liabilities and Owner's Equity Accounts Payable $189,051 $175,200 $145,600 Short-term Notes Payable $225,000 $225,000 $200,000 Other Current liabilities $163,380 $140,000 $136,000 Total Current Liabilities $577,431 $540,200 $481,600 Long-term Debt $424,612 $424,612 $323,432 Total Gabilities $1,002,043 $964,812 $805,032 Common Stock $460,000 $460,000 $460,000 Retained Earnings $297,039 $225,988 $203,768 Total Shareholder's Equity $757,039 $685,988 S663,768 Total Liabilities and Owner's Equity $1,759,082 $1,650,800 $1,468,800 - Forecast Discretionary Financing Needed 42 43 44 45 46 47 48 49 SO 51 52 53 54 55 56 57 Notes: Net Addition to Plant & Equipment Life of New Equipment in Years New Depreciation (Straight-line) $50,000 10 $5,000 B F G H M N 5 0 Widget Products International Sales Cost of Goods Sold Gross Profit Selling and G&A Expenses Fixed Expenses Depreciation Expense EBIT Interest Expense Earnings Before Taxes Taxes Net Income Forecast 2022 2021 2020 $4,300,000 $3,850,000 $3,432,000 $3,609,108 $3,250,000 $2,864,000 $690,892 $600,000 $568,000 $334,803 $330,300 $240,000 $100,000 $100,000 $100,000 $25,000 $20,000 $18,900 $231,090 $149,700 $209, 100 $76,000 $76,000 $62,500 $155,090 $73,700 $146,600 $62,036 $29,480 $58,640 $93,054 $44,220 $87,960 Utilize the iterative process to calculate the required level of "Long Term Debt" needed to eliminate the Discretionary Financing Need 7 8 9 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 Notes: Tax Rate Additional Depreciation Interest Rate 40.00% 40.00% $5,000 11.70% Widget Products International 2022 2021 2020 Assets Cash and Equivalents $75,000 $70,000 $60,000 Accounts Receivable $444,505 $402,000 $351,200 Inventory $914,899 $836,000 $715,200 Total Current Assets $1,434,404 $1,308,000 $1,126,400 Plant & Equipment $577,000 $527,000 $491,000 Accumulated Depreciation $191,200 $166,200 $146,200 Net Fixed Assets $385,800 $360,800 $344,800 Total Assets $1,820,204 $1,668,800 $1,471,200 Liabilities and Owner's Equity Accounts Payable $189,051 $175,200 $145,600 Short-term Notes Payable $225,000 $225,000 $200,000 Other Current liabilities $163,380 $140,000 $136,000 Total Current Liabilities $577,431 $540,200 $481,600 Long-term Debt $424,612 $424,612 $323,432 Total Gabilities $1,002,043 $964,812 $805,032 Common Stock $460,000 $460,000 $460,000 Retained Earnings $297,039 $225,988 $203,768 Total Shareholder's Equity $757,039 $685,988 S663,768 Total Liabilities and Owner's Equity $1,759,082 $1,650,800 $1,468,800 - Forecast Discretionary Financing Needed 42 43 44 45 46 47 48 49 SO 51 52 53 54 55 56 57 Notes: Net Addition to Plant & Equipment Life of New Equipment in Years New Depreciation (Straight-line) $50,000 10 $5,000