Day 0 Transactions / Initial Investment $30,000,000 equity is invested on Day 0. $20,000,000 debt is borrowed on Day 0. The Balance Sheet Assets on Day 0 are: o $3,000,000 cash o $3,000,000 accounts receivable o $4,000,000 inventory o $40,000,000 Property Plant and Equipment (PPE) Revenues Year 1 Sales are $25,000,000. Sales grow annually by the minimum of either (i) $3,000,000 or (ii) 8% of the previous years sales. Cost of Goods Sold Cost of Goods Sold equals 60% of sales Expenses Year 1 Expenses are $3,000,000 Expenses grow annually by 7% of the previous years expenses. Capital Expenditure On the final day of Year 4, additional PPE is purchased for $10,000,000. This new purchase is 90% funded by an equity injection on the same day, with the remainder funded by cash on hand. Depreciation The original $40,000,000 PPE (purchased on Day 0) depreciates over 10 years in a straight line method ($4,000,000 per year). The new PPE (purchased at the end of year 4) depreciates over 5 years in a straight line method. Debt Interest is charged on the outstanding debt at a rate of 6.50% per annum. Interest is paid at the end of each year. Principal repayments (i.e. not counting interest) are $2,500,000 per year until the debt is repaid. Repayments are made at the end of each year, immediately after interest payments are made.

ModelOff 2015 - Round 1

Round 1 Section 2 - Case Study Information Pack

Payment Terms / Working Capital Inventory at the end of each year is equal to 30% of Cost of Goods Sold Accounts Receivable at the end of each year are 10% of Sales Accounts Payable at the end of each year are 12% of Cost of Goods Sold plus 15% of Expenses Distributions to Equity At the end of each of year, any amount above $4,000,000 in the cash account after all other considerations are dealt with is distributed to equity investors. If there is less than or equal to $4,000,000 in the cash account prior to distributions, no distribution is made that year. Sizing of distributions is only constrained by cash available - not by book profits. Other Considerations Assume that all taxes are zero. Assume that no interest is earned / paid on Macrohards positive / negative cash account balance.

Please check and see if my balance sheet is correct?

0.02 Balance Sheet p Assets Cash Receivables Inventory PPE Total Assets [$1 $1 $1 3,000,000 3,000,000 4,000,000 40,000,000 50,000,000 7,000,000 2,500,000 4,500,000 36,000,000 50,000,000 7,590,000 2,700,000 4,860,000 32,000,000 47,150,000 8,229,300 2,916,000 5,248,800 28,000,000 44,394,100 (1,078,009) 3,149,280 5,668,704 34,000,000 41,739,975 9,672,502 3,401,222 6,122,200 28,000,000 47,195,924 10,485,626 3,673,320 6,611,976 22,000,000 42,770,922 11,366,552 3,967,186 7,140,934 16,000,000 38,474,672 12,251,399 4,267,186 7,680,934 10,000,000 34,199,519 13,114,185 4,567,186 8,220,934 4,000,000 29,902,305 13,953,366 4,867,186 8,760,934 [$ 27,581,486 3,794,975 4,061,558 4,331,680 Liabilities Payables Debt Total Liabilities [$1 [$] [$] 20,000,000 20,000,000 2,250,000 17,500,000 19,750,000 2,425,500 15,000,000 17,425,500 2,614,725 12,500,000 15,114,725 2,818,751 10,000,000 12,818,751 3,038,738 7,500,000 10,538,738 3,275,939 5,000,000 8,275,939 3,531,702 2,500,000 6,031,702 3,794,975 4,061,558 4,331,680 NET ASSETS [$] 30,000,000 30,250,000 29,724,500 29,279,375 28,921,224 36,657,186 34,494,983 32,442,970 30,404,544 25,840,747 23,249,805 p 30,000,000 28,921,224 Equity Shareholder Capital Retained Earnings Total Equity [$1 ($1 [$] 30,250,000 3.000.000 33,250,000 29.724.500 3.590.000 33,314,500 29,279,375 4,229, 300 33,508,675 36,657,186 5.672,502 42,329,688 34,494,983 6.485.626 40,980,609 32,442,970 7.366,552 39,809,522 30,404,544 8.251.399 38,655,942 25,840,747 9,114, 185 34,954,932 23,249,805 9.953,366 33,203,171 30,000,000 28,921,224 0.02 Balance Sheet p Assets Cash Receivables Inventory PPE Total Assets [$1 $1 $1 3,000,000 3,000,000 4,000,000 40,000,000 50,000,000 7,000,000 2,500,000 4,500,000 36,000,000 50,000,000 7,590,000 2,700,000 4,860,000 32,000,000 47,150,000 8,229,300 2,916,000 5,248,800 28,000,000 44,394,100 (1,078,009) 3,149,280 5,668,704 34,000,000 41,739,975 9,672,502 3,401,222 6,122,200 28,000,000 47,195,924 10,485,626 3,673,320 6,611,976 22,000,000 42,770,922 11,366,552 3,967,186 7,140,934 16,000,000 38,474,672 12,251,399 4,267,186 7,680,934 10,000,000 34,199,519 13,114,185 4,567,186 8,220,934 4,000,000 29,902,305 13,953,366 4,867,186 8,760,934 [$ 27,581,486 3,794,975 4,061,558 4,331,680 Liabilities Payables Debt Total Liabilities [$1 [$] [$] 20,000,000 20,000,000 2,250,000 17,500,000 19,750,000 2,425,500 15,000,000 17,425,500 2,614,725 12,500,000 15,114,725 2,818,751 10,000,000 12,818,751 3,038,738 7,500,000 10,538,738 3,275,939 5,000,000 8,275,939 3,531,702 2,500,000 6,031,702 3,794,975 4,061,558 4,331,680 NET ASSETS [$] 30,000,000 30,250,000 29,724,500 29,279,375 28,921,224 36,657,186 34,494,983 32,442,970 30,404,544 25,840,747 23,249,805 p 30,000,000 28,921,224 Equity Shareholder Capital Retained Earnings Total Equity [$1 ($1 [$] 30,250,000 3.000.000 33,250,000 29.724.500 3.590.000 33,314,500 29,279,375 4,229, 300 33,508,675 36,657,186 5.672,502 42,329,688 34,494,983 6.485.626 40,980,609 32,442,970 7.366,552 39,809,522 30,404,544 8.251.399 38,655,942 25,840,747 9,114, 185 34,954,932 23,249,805 9.953,366 33,203,171 30,000,000 28,921,224