Must answer all the questions, explain, show calculation, step by step.

4. Regarding Asset Purchases. Assuming assets vary directly with sales, by how much will assets need to be increased to support the projected sales increase? (For Q4, you may round Challenge questions are not marked. your answers to the nearest dollar.)

5. Regarding the issuance of new debt. (For Q5, you may round your answers to the nearest dollar.)

5a. What is the 2022 D/E ratio?

5b. The CFO has decided the debt ratio is NOT to be maintained. Going forward, the CFO has told the financial analysts to use a D/E ratio of 0.5 on all new financing. In other words, to finance the purchase of the assets (Q4) for this sales expansion, theyre to use the new ratio. What will be the debt-equity mix be in regard to financing the upcoming purchase?

5c. So how much new debt will be issued?

6. Regarding the use of retained earnings. (For Q6, you may round your answers to the nearest $.)

6a. What can Corpus expect net income to be if sales are indeed increased by 35% over 2022 sales? (Generate a Profit & Loss Statement.) Assume the average interest to be paid on all debtboth new and oldwill be 8%. Further assume that Corpus will have lost its small business status with the CRA, and that combined federal and provincial taxes will be 29%. Finally, you neednt itemize all the individual operating expensesyou can simply lump them together and call them operating expenses.

6b. What is Corpus 2022 payout ratio?

6c. Assume Corpus maintains the 2022 payout ratio during the sales expansion. What will retained earnings be?

9. Regarding Asset Utilization. (For Q9, you may round your answers to the nearest dollar.)

9a. As it turns out, Corpus isnt actually fully utilizing its factories. Theyre currently (as of the end of 2022) only producing at 85% capacity. Management wants to employ unused capacity first, before they purchase additional PPE. So how much will they actually need to increase PPE by to meet the proposed sales increase?

9b. Now reconsider your answer to Q4. Given that they intend to more fully utilize their PPE, what do total assets need to increase by in order to achieve the increase in sales?

9c. Now look back at your answer to Q5b. What will the new debt-equity mix for the purchase of the assets look like? (Continue to assume the D/E ratio to be observed in regard to the purchase of these new assets is 0.5.)

9d. Recalculate NI and RE, given the lower amount of new debt to be issued. Your Profit & Loss Statement from Q6a can be re-used with revenues down through EBIT being unchanged. Interest charges, EBT, taxes, and NI will need to be recalculated, though. (And dont forget to calculate new RE.)

9e. What will the financing package now look like

CORPUS CORPORATION \begin{tabular}{|c|c|c|} \hline \begin{tabular}{l} STATEMENT OF FINANCIAL POSITION \\ Assets \end{tabular} & 2021 & 2022 \\ \hline \multicolumn{3}{|l|}{ Current } \\ \hline Cash & 500 & 550 \\ \hline Investments (ST) & 300 & 350 \\ \hline Receivables & 400 & 200 \\ \hline Inventories & 700 & 900 \\ \hline Total Current & 1900r & 2000 \\ \hline \multicolumn{3}{|l|}{ Non-current } \\ \hline Property, Plant, Equipment & 7250 & 8800 \\ \hlineIntangibles & 500 & 700 \\ \hline Total Non-current & 7750 & 9500 \\ \hline Total Assets & 9650 & 11500 \\ \hline \multicolumn{3}{|l|}{ Liabilities } \\ \hline \multicolumn{3}{|l|}{ Current } \\ \hline Payables & 3000 & 3300 \\ \hline Loans (ST) & 900 & 1100 \\ \hline Total Current & 3900 & 44001100 \\ \hline \multicolumn{3}{|l|}{ Non-current } \\ \hline Debt (LT Bonds) & 5550 & 7000 \\ \hline Total Non-current & 5550 & 7000 \\ \hline Total Liabilities & 9450 & 11400 \\ \hline \multicolumn{3}{|l|}{ Equity } \\ \hline Shareholders' Equity & 200 & 100 \\ \hline Total & 200 & 100 \\ \hline STATEMENT OF PROFIT AND LOSS & 2021 & 2022 \\ \hline Revenues & 12000 & 10500 \\ \hline - CoGS & (7200) & (6300) \\ \hline Gross Profit & 4800 & 4200 \\ \hline - Administrative & (275) & (220) \\ \hline - Depreciation & (725) & (657) \\ \hlineR&D & (900) & (1300) \\ \hline - Sales and Distribution & (500) & (100) \\ \hline - Salaries & (1000) & (1000) \\ \hline - Total Operating Expenses & (3400) & (3277) \\ \hline EBIT (a.k.a. Operating Income) & 1400 & 923 \\ \hline - Interest & (800) & (810) \\ \hline EBT & 600 & 113 \\ \hline - Taxes & 86.5 & 13 \\ \hline Net Income & 513.5 & 100 \\ \hline \end{tabular} Dividends were 50 in both 2021 and 2022