GHI K L M N B C D E F Financial Planning The Cambridge Company Income Statement) Balance Sheet Next Year Beginning Next Year Ending Revenues 7 Cost/Expense 8EBIT 9 Interest $ 20.000 16,000 ASSETS. Total Asset $ 12,000 $ 14,000 LIABILITIES & EQUITY 10 EBT 11 Tax 12 Net Income 13 14 15 16 Interest Rate 10% 17 Tax Rate 30% 18 Current Liabilities 500 680 Debl 5,000 Equity 6,500 Total Liabilities and Equity $ 12,000 Since Interest expense is dependent upon debt, which itself is dependent upon interest expense 19 (through net income), Excel must make several iterations to calculate the solution. 20 To set the work sheet for more than one iteration: Click on Files, Options, and then Formulas. From 21 the Formulas tab check iteration and salect 100 iterations. 22 23 24 25 Follow these steps Income Statement 1) Enter a formula for EBIT 2) Enter a formula for interest expense 3) Calculate EBT, Taxes, and I Notice the interest expense is zero, because right now debt is zerol Balance Sheet 1) Enter a formula for Equity 2) Enter a formula for Debt Notice the interest expense is no longer zero, because now we have a debt balancer +