Forecast Ideko's free cash flow (reproduce Table 19.10 1, assuming Ideko's market share will increase by 0.40 percent per year, investment, financing, and depreciation will be adjusted accordingly; and the projected improvements in working capital occur (that is, Ideko's working capital requirements through 2010 will be as shown here Ideko's pro-forma income statements for 2005-2010 are shown here , while its balance sheet for 2005 is shown here Ideko's production plant will require an expansion in 2010 (when production volume will exceed the current level by 50%), and the cost of this expansion will be $15.5 million. This amount will be borrowed from a financial institution at an interest rate of 6.7%. The new projected capital investments are shown here . (Assume an income tax rate of 35%.) Ideko's Working Capital Requirements Working Capital ( $000) 2005 Assets \begin{tabular}{lrrrrrrr} \hline Income Statement ($000) & 2005 & 2006 & 2007 & 2008 & 2009 & 2010 \\ \hline Sales & 71,527 & 79,871 & 89,051 & 99,147 & 110,244 & 122,432 \\ Cost of Goods Sold & & & & & & \\ Raw Materials & (16,168) & (17,851) & (19,678) & (21,662) & (23,816) & (26,150) \\ Direct Labor Costs & (17,631) & (20,044) & (22,752) & (25,791) & (29,198) & (33,013) \\ Gross Profit & 37,728 & 41,976 & 46,621 & 51,694 & 57,230 & 63,269 \\ Sales and Marketing & (10,829) & (13,211) & (15,976) & (19,175) & (21,762) & (24,168) \\ Administrative & (12,896) & (12,005) & (13,384) & (13,910) & (14,365) & (15,953) \\ EBITDA & 14,003 & 16,760 & 17,261 & 18,609 & 21,103 & 23,148 \\ Depreciation & (5,570) & (5,518) & (5,471) & (5,429) & (5,391) & (6,907) \\ EBIT & 8,433 & 11,242 & 11,790 & 13,180 & 15,712 & 16,241 \\ Interest Expense ( net) & (79) & (6,700) & (6,700) & (6,700) & (6,700) & (6,700) \\ Pretax Income & 8,354 & 4,542 & 5,090 & 6,480 & 9,012 & 9,541 \\ Income Tax & (2,924) & (1,590) & (1,782) & (2,268) & (3,154) & (3,339) \\ Net Income & 5,430 & 2,952 & 3,308 & 4,212 & 5,858 & 6,202 \\ \hline \end{tabular} Estimated 2005 Balance Sheet Data for Ideko Corporation Balance Sheet ( $000) Assets \begin{tabular}{lr} Cash and Equivalents & 6,164 \\ Accounts Receivable & 17,637 \\ Inventories & 6,165 \\ \hline Total Current Assets & 29,966 \\ Property, Plant, and Equipment & 50,130 \\ Goodwill & 72,332 \\ \hline Total Assets & 152,428 \\ \hline \end{tabular} \begin{tabular}{lr} \hline Liabilities and Stockholders' Equity & \\ Accounts Payable & 4,654 \\ Debt & 100,000 \\ \hline Total Liabilities & 104,654 \\ Stockholders' Equity & 47,774 \\ \hline Total Liabilities and Equity & 152,428 \\ \hline \end{tabular} Fixed Assets and Capital Investment ($000) \begin{tabular}{lcccccc} \hline & 2005 & 2006 & 2007 & 2008 & 2009 & 2010 \\ \hline New Investment & 5,050 & 5,050 & 5,050 & 5,050 & 5,050 & 20,550 \\ Depreciation & (5,570) & (5,518) & (5,471) & (5,429) & (5,391) & (6,907) \\ \hline \end{tabular} Calculate Ideko's free cash flow through 2010 below: (Round to the nearest $000.) Forecast Ideko's free cash flow (reproduce Table 19.10 1, assuming Ideko's market share will increase by 0.40 percent per year, investment, financing, and depreciation will be adjusted accordingly; and the projected improvements in working capital occur (that is, Ideko's working capital requirements through 2010 will be as shown here Ideko's pro-forma income statements for 2005-2010 are shown here , while its balance sheet for 2005 is shown here Ideko's production plant will require an expansion in 2010 (when production volume will exceed the current level by 50%), and the cost of this expansion will be $15.5 million. This amount will be borrowed from a financial institution at an interest rate of 6.7%. The new projected capital investments are shown here . (Assume an income tax rate of 35%.) Ideko's Working Capital Requirements Working Capital ( $000) 2005 Assets \begin{tabular}{lrrrrrrr} \hline Income Statement ($000) & 2005 & 2006 & 2007 & 2008 & 2009 & 2010 \\ \hline Sales & 71,527 & 79,871 & 89,051 & 99,147 & 110,244 & 122,432 \\ Cost of Goods Sold & & & & & & \\ Raw Materials & (16,168) & (17,851) & (19,678) & (21,662) & (23,816) & (26,150) \\ Direct Labor Costs & (17,631) & (20,044) & (22,752) & (25,791) & (29,198) & (33,013) \\ Gross Profit & 37,728 & 41,976 & 46,621 & 51,694 & 57,230 & 63,269 \\ Sales and Marketing & (10,829) & (13,211) & (15,976) & (19,175) & (21,762) & (24,168) \\ Administrative & (12,896) & (12,005) & (13,384) & (13,910) & (14,365) & (15,953) \\ EBITDA & 14,003 & 16,760 & 17,261 & 18,609 & 21,103 & 23,148 \\ Depreciation & (5,570) & (5,518) & (5,471) & (5,429) & (5,391) & (6,907) \\ EBIT & 8,433 & 11,242 & 11,790 & 13,180 & 15,712 & 16,241 \\ Interest Expense ( net) & (79) & (6,700) & (6,700) & (6,700) & (6,700) & (6,700) \\ Pretax Income & 8,354 & 4,542 & 5,090 & 6,480 & 9,012 & 9,541 \\ Income Tax & (2,924) & (1,590) & (1,782) & (2,268) & (3,154) & (3,339) \\ Net Income & 5,430 & 2,952 & 3,308 & 4,212 & 5,858 & 6,202 \\ \hline \end{tabular} Estimated 2005 Balance Sheet Data for Ideko Corporation Balance Sheet ( $000) Assets \begin{tabular}{lr} Cash and Equivalents & 6,164 \\ Accounts Receivable & 17,637 \\ Inventories & 6,165 \\ \hline Total Current Assets & 29,966 \\ Property, Plant, and Equipment & 50,130 \\ Goodwill & 72,332 \\ \hline Total Assets & 152,428 \\ \hline \end{tabular} \begin{tabular}{lr} \hline Liabilities and Stockholders' Equity & \\ Accounts Payable & 4,654 \\ Debt & 100,000 \\ \hline Total Liabilities & 104,654 \\ Stockholders' Equity & 47,774 \\ \hline Total Liabilities and Equity & 152,428 \\ \hline \end{tabular} Fixed Assets and Capital Investment ($000) \begin{tabular}{lcccccc} \hline & 2005 & 2006 & 2007 & 2008 & 2009 & 2010 \\ \hline New Investment & 5,050 & 5,050 & 5,050 & 5,050 & 5,050 & 20,550 \\ Depreciation & (5,570) & (5,518) & (5,471) & (5,429) & (5,391) & (6,907) \\ \hline \end{tabular} Calculate Ideko's free cash flow through 2010 below: (Round to the nearest $000.)