Below are the $2023$ financial statements for Silicone Technologies. For $2024$ assume that:

$1.$ Volume of sales units will increase by $10$ percent.

$2.$ Investment in fixed assets will be R$10$ million.

$3.$ Cost of goods sold, accounts receivable, inventories and accounts payable will rise in

proportion to sales.

$4.$ Dividends will equal $20$ percent of profit after tax.

$5.$ General selling expenses, depreciation, tax rate, long$-$term debt, and common stock will

not change.

If Silicone Technologies wants to maintain a minimum cash balance of at least R$5$ million, how

large a bank loan will be required at year$-$end $2024?($You may ignore any increases in interest

expense$).$

HINT: Forecast the $2024$ I$/$S and B$/$S and solve for the LT Debt.

Income Statement and Balance Sheet

December $31,2023$

$($EUR millions$)$

Net sales $90\mathrm{.}00$

Cost of goods sold $54\mathrm{.}00$

Gross profit $36\mathrm{.}00$

General selling expenses $10\mathrm{.}00$

Depreciation $10\mathrm{.}00$

Interest expense $5\mathrm{.}00$

Profit before tax $11\mathrm{.}00$

Tax at $32\%3\mathrm{.}52$

Profit after tax $7\mathrm{.}48$

Dividends paid $1\mathrm{.}50$

Additions to retained earnings $5\mathrm{.}98$

Net Assets

Net Fixed Assets $70\mathrm{.}00$

Accounts receivable $17\mathrm{.}00$

Inventories $23\mathrm{.}00$

Cash $10\mathrm{.}00$

Less accounts payable $-8\mathrm{.}00$

Net Working Capital $42\mathrm{.}00$

Net Assets $112\mathrm{.}00$

Capital Employed

Ordinary Shares $20\mathrm{.}00$

Retained earnings $20\mathrm{.}00$

Long$-$term debt $50\mathrm{.}00$

Bank Overdraft $22\mathrm{.}00$

Total liabilities and equity $112\mathrm{.}00$