contains the 2018 financial statements of Zeiber Corporation. Forecast Zeiber's 2019 income statement and balance sheets. Use the following assumptions: (1) Sales grow by 6%. (2) The ratios of expenses to sales, depreciation to fixed assets, cash to sales, accounts receivable to sales, and inventories to sales will be the same in 2019 as in 2018. (3) Zeiber will not issue any new stock or new long-term bonds (4) The interest rate is 11% for long-term debt and the interest expense on long-term debt is based on the average balance during the year (5) No interest is earned on cash. (6) Regular dividends grow at an 8 % rate . Calculate the additional funds needed (AFN). If new financing is required, assume it will be raised by drawing on a line of credit with an interest rate of 12%. If surplus funds are available, pay a special dividend Key Input Data: Used in the forecast Tax rate 40% Dividend growth rate Rate on notes payable-term debt, r 8% 9% Rate on long-term debt, ra Rate on line of credit, roc 11% 12% a. What are the forecasted levels of the line of credit and special dividends? (Hints: Create a column showing the ratios for the current year; then create a new column showing the ratios used in the forecast. Also, create a preliminary forecast that doesn't include any new line of credit or special dividends. Identify the financing deficit or surplus in this preliminary forecast and then add a new column that shows the final forecast that includes any new line of credit or special dividend.) Begin by calculating the appropriate historical ratios in Column E. Then put these ratios and any other input ratios in Column G Forecast the preliminary balance sheets and income statements in Column H. Don't include any line of credit or special dividend in the preliminary forecast. After completing the preliminary forecast of the balance sheets and income statement, go to the area below the preliminary forecast and identify the financing deficit or surplus. Then use Excel's IF statements to specify the amount of any new line of credit OR special dividend (you should not have a new line of credit AND a special dividend, only one or the other). After specifying the amounts of the special dividend or line of credit, include the final forecast in column H next to the column for the preliminary forecast (G). In this final forecast, be sure to include the effect of the special dividend or line of credit. 2019 Input 2019 Preliminary Income Statements: (December 31, in thousands of dollars forecast (doesn't include special Ratios 2019 Final forecast (includes special dividend or LOC) (use 2018 dividend or LOC) 2018 Forecasting basis ratios) $455,150 $386,878 $14,565 % of fixed assets $53,708 $11,880 $0 $41,828 $16,731 $25,097 Sales Sales Growth 6.0% Expenses (excluding depr. & amort.) Depreciation and Amortization % of sales BIT Interest expense on long-term debt Interest expense on line of credit Interest rate Interest rate T Taxes (40%) x rate Net Income $12,554 Common dividends (reqular dividends Growth Special dividends Addition to retained earnings Zero in preliminary forecast $12,543 2019 Preliminary Balance Sheets (December 31, in thousands of dollars 2019 Final forecast (includes special dividend or LOC) forecast (doesn't include special dividend or LOC) 2019 Input Forecasting basis 2018 ratios Assets: $18,206 $100,133 $45,515 $163,854 $182,060 $345,914 Cash % of sales Accounts Receivable Inventories % of sales % of sales Total current assets Fixed assets % of sales Total assets Liabilities and equity Accounts payable $31,861 $27,309 $0 Zero in preliminary forecast $59,170 $120,000 Same as previous $179,170 $60,000 Same as previous $106,745 $166,745 $345,914 % of sales % of sales Accruals Line of credit Total current liabilities Long-term debt Total liabilities Common stock Retained Earnings Total common equity Total liabilities and equity PreviousAddition to RE Balance Sheet Check Total Assets Total Liabilities & Equity $0 $0 Identify Financing Deficit or Surplus Increase in spontaneous liabilities (accounts payable and accruals) Increase in long-term bonds, preferred stock and common stock Net income (in preliminary forecast) minus regular common dividends Increase in financing - Increase in total assets Amount of financing deficit or surplus: Use if) statement. Use if) statement. If deficit in financing (negative), show the amount for the line of credit If surplus in financing (positive), show the amount of the special dividend a. What are the forecasted levels of the line of credit and special dividends with a 6% qrowth in sales? Assume that any draw on the line of credit will be made on the last day of the year, so there will be no additional interest expense for the new line of credit (assume a value of zero for G:H60)