Forecast Zeiber's 2017 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 2017 as in 2016. (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. (6) 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%. 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. If surplus funds are available, pay a special dividend. Key Input Data: Used in the forecast Tax rate 40% Dividend growth rate 8% Rate on notes payable-term debt, rstd 9% Rate on long-term debt, rd 11% Rate on line of credit, rLOC 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, create a second column (I) for the final forecast next to the column for the preliminary forecast (H). In this final forecast, be sure to include the effect of the special dividend or line of credit. (Already have answers, but having difficulty using excel formulas to actually solve for them. Any help greatly appreciated)

Income Statements:			2016	2016 Historical ratios	Forecasting basis	2017 Input ratios	2017 Preliminary forecast (doesn't include special dividend or LOC)	2017 Final forecast (includes special dividend or LOC)
(December 31, in thousands of dollars)
Sales			$455,150		Growth	6.0%	$482,459	$482,459
Expenses (excluding depr. & amort.)			$386,878	85.0%	% of sales	85.0%	$410,090	$410,090
Depreciation and Amortization			$14,565	8.0%	% of fixed assets	8.0%	$15,439	$15,439
EBIT			$53,708				$56,930	$56,930
Interest expense on long-term debt			$11,880		Interest rate x average debt during year		$13,200	$13,200
Interest expense on line of credit			$0				$0	$543
EBT			$41,828				$43,730	$43,817
Taxes (40%)			$16,731				$17,492	$17,275
Net Income			$25,097				$26,238	$25,912
Common dividends (regular dividends)			$12,554		Growth	8.00%	$13,558	$13,558
Special dividends					Zero in preliminary forecast		$0	$0
Addition to retained earnings			$12,543				$12,680	$12,354
Balance Sheets			2016	2016 Historical ratios	Forecasting basis	2017 Input ratios	2017 Preliminary forecast (doesn't include special dividend or LOC)	2017 Final forecast (includes special dividend or LOC)
(December 31, in thousands of dollars)
Assets:
Cash			$18,206	4.0%	% of sales	4.00%	$19,298	$19,298
Accounts Receivable			$100,133	22.0%	% of sales	22.00%	$106,141	$106,141
Inventories			$45,515	10.0%	% of sales	10.00%	$48,246	$48,246
Total current assets			$163,854				$173,685	$173,685
Fixed assets			$182,060	40.0%	% of sales	40.00%	$192,984	$192,984
Total assets			$345,914				$366,669	$366,669
Liabilities and equity
Accounts payable			$31,861	7.0%	% of sales	7.00%	$33,772	$33,772
Accruals			$27,309	6.0%	% of sales	6.00%	$28,948	$28,948
Line of credit			$0		Zero in preliminary forecast		$0	$4,525
Total current liabilities			$59,170				$62,720	$67,245
Long-term debt			$120,000		Previous		$120,000	$120,000
Total liabilities			$179,170				$182,720	$187,245
Common stock			$60,000		Previous		$60,000	$60,000
Retained Earnings			$106,745		Previous + Addition to retained earnings		$119,424	$119,424
Total common equity			$166,745				$179,424	$179,424
Total liabilities and equity			$345,914				$362,144	$366,669

Identify Financing Deficit or Surplus
Increase in spontaneous liabilities (accounts payable and accruals)							$3,550
+ Increase in long-term bonds, preferred stock and common stock							$0
+ Net income (in preliminary forecast) minus regular common dividends							$12,680
Increase in financing							$16,230
Increase in total assets							$20,755
Amount of financing deficit or surplus:							-$4,525
If deficit in financing (negative), show the amount for the line of credit							$4,525
If surplus in financing (positive), show the amount of the special dividend							$0

a. What are the forecasted levels of the line of credit and special dividends?
Required ine of credit						$4,525	Note: we copied values from H99:H100 when sales growth in G51 = 6%.
Special dividends						$0
b. Now assume that the growth in sales is only 3% (do this by changing the growth rate in Cell G51). What are the forecasted levels of line of credit and special dividends?
Required ine of credit						$4,389	Note: we copied values from H99:H100 when sales growth in G51 = 3%.
Special dividends						$0