Homework 2 Home Insert Draw Page Layout Formulas Data Review View Acrobat Aria . 10 A A General Paste B 1 U- WO A. Merge Deli F14 Conditional Format Printable De 1 J K L M 8 A B D E G H 1 Problem 4 2 Note: You must enable iterative calculations option before viewing the answers to this problem) 3 you have been assigned to forecast and analyze financial statements of Duluth Inc. 4 or the 2021-2026 period to gauge fair value of Duluth. The initial information is listed 5 n the yellow cells of the Problem 4.2 sheet. Answer the following questions 6 7 a) Complete Balance sheet for this company (5 points) 9 Show results in the Problem 4.2 sheet) 10 11 12 b) Complete Income statement for this company (5 points) 13 14 Show results in the Problem 4.2 sheet 15 16 17 c.) Derive Free Cash Flows for this company (5 points) 19 Show results in the Problem 42 shoot) 20 21 22 d) Find equity value for this company (4 points) 23 24 Show result in cell 075) 25 28 a) Complete Data Table (Growth rate vs. Tax Rate) (5 points) 27 18 Homework 2 Home Insert Draw Page Layout Formulas Data Review View Acrobat A-A- We Ceneral nar Fat 24. a De Merge Centre 182 Con Format Formatting natit f fo ds format B D E F G H swers A 1 Valuing Duluth Inc. (Problem 4) 2 Assumptions 3 Sales growth rate (2021/22.2022/23, 2023/24) 4 Sales growth rate (2024/25, 2025/26) 5 Current assets/Sales 6 Current liabilities/Sales 7 Net fixed assets/Sales 8 Costs of goods sold/Sales 9 Depreciation rate 10 Interest rate on debt 11 Interest paid on cash and marketable sec 12 Tax rate 13 Dividend payout ratio 14 15 Year 16 Income statement (mil. US$) 17 Sales 18 Costs of goods sold 19 Interest payments on debt 20 Interest eamed on cash and marketable soc. 21 Depreciation 22 Profit before tax 23 Taxes 24 Profit after tax (net income). 25 Dividends 26 Retained oamings (Note: You must enable iterative calculations option before viewing the 15% 3% (use this growth rate in calculation of terminal value and in parte) 16% 8% 40% 30% 12% 7.00% 1.00% 35% 15% 2021 2022 2023 2024 2025 2026 $4,000 (5210) Homework 2 ome Insert Draw Page Layout Formulas Data Review View Acrobat Arial 10 AA- To Wrap Text General hart B 1 U- A Delete- Merge & Centre Conditional Format Ced Formatting as Table Styles Format x x B D E F G $120 ($265) A 5 Dividends 6 Retained earnings 27 28 Balance sheet (mil. US$) 29 Cash and marketable securities 30 Current assets 31 Fixed assets 32 At cost 33 Accumulated Depreciation 34 Net fixed assets 35 Total assets 36 37 Current liabilities 38 Debt 39 Stock 40 Accumulated retained earings 41 Total liabilities and equity 42 43 44 45 46 47 48 49 50 51 52 Year $600 $850 2021 2022 2026 2023 2024 2025 Home Insert Draw Homework 2 Page Layout Formulas Data Review View Acrobat Arial - A-A Write Post General B I U . Merge Centre + 192 Condo For Cee Formatting Sys Format Sort TA B D E F G H 2021 2022 2023 2024 2025 2026 51 52 Year 53 Free cash flow calculation 54 Start with Profit after tax 55 Add back depreciation 56 Subtract increase in current assets 57 Add back increase in current liabilities 58 Subtract increase in fixed assets at cost 59 Add back after-tax interest on debt 60 Subtract after tax intereson cash and mkt. sec. 61 Free cash flow (mil. USS) 62 63 Valuing the firm 64 Weighted average cost of capital (WACC) 65 66 Year 67 FCF 68 Terminal value 69 Total 70 71 NPV of row 69 72 Add in initial (year 2021) cash and mkt. 500 73 Enterprise value 74 Subtract out value of firm's debt today (yr 2021) 75 Equity value 26% 2021 2022 2023 2024 2025 2026 Homework 2 Home Insert Draw Page Layout Formulas Q- Data Review View Acrobat Aria 10 A-A- To Wrap Test General Paste B U Merge Centre 56 ) Conditional Format Formatting Title Sort 182 xfx B D E F G H 67 FCF 68 Terminal value 69 Total 70 71 NPV of row 69 72 Add in initial (year 2021) cash and mkt. sec. 73 Enterprise value 74 Subtract out value of firm's debt today (yr 2021) 75 Equity value 76 25% 35% 82 77 78 All else equal, what is the effect 79 of a decline in tax rate from 35% to 80 20% on the equity value? For which growth rate the impact of tax rate 81 decrease is most prounounced? Use numbers in the data table to 83 answer this question. Provide your 84 answer below. (6 points) 85 86 B7 88 89 90 91 growth rate of sales for 2025/26 Tax Rate 20% 1% 2% 3% 4% 5% 6% 7% 8% 9%