J. Clark Inc. (JCI), a manufacturer and distributer of sports equipment, has grown until it has become a stable, mature company. Now JCI is planning its first distribution to shareholders. Shown below are the most recent year's financial statements and projections for the next year, 2020 (JCI has a fiscal year ending on June 30). JCI plans to liquidate $500 million of its short-term securities and distribute them on July 1, 2020, the first day of the next fiscal year, but has not yet decided whether to distribute with dividends or with stock repurchases.
Inputs
Amount of distribution		$500
Tax rate		25%
WACC		11.0%
Number of shares		1,000
FCF constant growth rate		6.0%
		Actual	Projected
Income Statement (Millions of Dollars)		06/30/2019	06/30/2020
Net Sales		$19,490	$20,658
Costs (except depreciation)		$16,000	$16,960
Depreciation		$1,300	$1,378
Earning before int. & tax		$2,190	$2,320
Interest expense		$150	$152
Earnings before taxes		$2,040	$2,168
Taxes		$510	$542
Net income		$1,530	$1,626
a. Assume first that JCI distributes the $500 million as dividends. Fill in the missing values in the balance sheet column for July 1, 2020, that is labeled "Distribute as Dividends." (Hint: Be sure that the balance sheets balance after you fill in the missing items. Also, assume JCI did not have to establish an account for dividends payable prior to the distribution.)
See below for calculations.
b. Now assume that JCI distributes the $500 million through stock repurchases. Fill in the missing values in the balance sheet column for July 1, 2020, that is labeled "Distribute as Repurchase." (Hint: Be sure that the balance sheets balance after you fill in the missing items.)

TOE 55 calculations. 36 5. Now assume that JCI distributes the $500 million through stock repurchases. Fill in the missing values 37 in the balance sheet column for July 1, 2020, that is labeled "Distribute as Repurchase." (Hint: Be sure 38 that the balance sheets balance after you fill in the missing items.) Distribute Repurchas Dividend 7/1/2020 $170 7/2/2020 $170 Projected: Prior to Actual Distribution 6/30/2019 6/30/2020 $160 $170 $200 $640 $2,000 $2,120 $3,000 $3.180 $5,360 $6,110 $13,000 $13.780 $18,360 $19.890 $2,120 $3180 $5,470 $13.780 $19.250 $2,120 $3,180 $5,470 $13, 780 $19.250 42 Balance Sheets (Millions of Dollars) 43 Assets 44 Cash 45 Short-term Investments 46 Accounts receivable 47. Inventories 48 Total current assets 49 Net plant and equipment 50 Total assets 51 Liabilities & Equity 52 Accounts payable S3 Accruals 54 Short-term debt 55 Total current liabilities 56 Long-term debt 57 'otal liabilities 58 Common stock 59 Treasury stock 60 Retained earnings 01 Total common equity 62 Total liabilities & equity $1,060 $2,120 $124 $1,060 $2,120 $124 $1.000 $2.000 $400 $3,400 $2.070 $5,470 $5.850 (5400) $7440 $12,890 $18,360 $1,060 $2,120 $124 $3,304 $2.070 $5,374 $6,850 $3,304 $2.070 $5,374 $5,850 $3,304 $2070 $5,374 $5.850 (5400) $9,066 $14,516 $19,890 $5,850 $11,224 $5,860 $11.224 NOT BALANCED BALANCED 500260 SOLO $0.0 $0.0 64 Check for balance: 06.c. Caculate JCI's projected free cash flow, the tax rate is 26% Build Model