PARE Use the following information on Company and perform pro-forma financial modeling using a planned expansion method to answers the following questions. To do this assume that the percentage values with respect to sales of the 2020 costs except depreciation (1) cash and equivalents, (W) accounts receivable. Inventories, and M accounts payable will remain fixed at their respective percentage values in 2019. Assume also that income tax will remain at 30% of the Pretax income. Company Y sells a product for which in 2019 the total market size was of 1,000,000 units, of which Company owned a share of 30%. Both the total market size and Company Ys market share are expected to grow at a 15 yearly rate for the next five years. The price of the product is 5114 in 2019 and is expected to remain at that price for the next years TALE Market 2019 2020 2021 2022 1,000,000 1,150,000 1,322,500 1,520,875 30.000% 34.500% 39.675% 45.626% Analysis Market Size Market Share Production Volume Average Sales Price 300,000 114 Sales in 2019, the outstanding debt of Company is 5500,000, for which the company makes yearly interest payments of 10%. The executives of Company Yare considering making a significant capital investment in 2020 of 12,000,000 to purchase new machinery. The company plans to finance this investment with a 30 year loan that makes yearly interest payments equivalent to 8% of its principal. The principal is paid when the loan matures. The following table summarizes the debt and interest payment of Company 2020 2021 Debt and Te Interest 2019 3 Table Outstanding De 500,000 New Ne Bouwing Interest on Debt 300,000 2,500,000 2,000,000 Currendy Company makes yearly expenditures on replacement part of 350.000 the company makes the planned expansion, it has been decided that it will contine macement anno 350.000 and indung 2020 and in 2001 will perform yearly expenditures on replacement anno 1700.000The current and the planned expenditures replacement of capital investment will be financed by the company cash on the flowing for 2019 Company of opening hoopt depreciation, and desire book wall. The windows the 2020 2021 forecast on the banned expansion were to occur in 2020. Because no decision Currey y RC CU EXPERTISERER TEICOT company EU POWERPT TO Y decided that it will continue making replacement capital investment of $50,000 until and including 2020, and starting in 2021 it will perform yearly expenditures on replacement capital investment of $200,000. The current and the planned expenditures on replacement of capital Investment will be financed by the companys cash flow. The following table indicates for 2019 Company Ys values of opening book value, il capital investment, il depreciation, and iv. closing book value. The Table also indicates the 2020-2021 forecast values of capital depreciation if the planned expansion were to occur in 2020. Because no decision has yet been done about dividends, before making any balanding adjustments to the Balance Sheet, assume that these will be $0 in 2020. Fixed Assets & 2019 2020 2021 TABLE Capital 33 Investment Opening 1,000,000 Book Value Capital Investment 50,000 Depreciation -105,000 -299,500 289,550 Closing Book Value 945.000 The following table contains Company income statement for 2019, TAM Income 2019 Statement: 2020 Sales 34,200,000 Costs op! Dopr -2,736,000 EBITDA 31,464,000 Depreciation 105,000 EBIT 31.359,000 Interest Expense 50,000 (net) Preta Income 31,309,000 Income Tax 9,392,700 Net Income 21.916,300 www. The following table contains Company Ys balance sheet for 2019. Balance TAHU Sheet 13 Assets: 2019 2020 Assets Cash and Equivalents Accounts Receivable 11,970,000 10,260,000 Inventories 3,420,000 25,650,000 Total Current Assets Property, Plant and Equipment Total Assets 945,000 26,595,000 2020 Balance Sheet - Liabilities 2019 and Equity Liabilities Accounts Payable 10,260,000 Total Current Liabilities 10,260,000 Debt 500,000 Total Liabilities 10,760,000 Stockholden Equity Starting Starting Stockholders' 1,000,000 Equity Net Income 21,916,300 Dividends -7,081,300 Stockholders 15,835,000 Equity Total Liabilities 26,595,000 and Equity What is the forecasted value of sales for 2020? Express the numerical terms of your answer completely. For example: If your answer is one million dollars, write: 1000000.- QUESTION 2 "What is the forecasted value of Interest on Debt for 2020? Enter your answer as POSITIVE value (not as a negative value). Express the numerical terms of your answer completely. For example: If your answer is one million dollars, write: 1000000 QUESTION "What is the forecasted value of Capital Investment for 20207 Enter your answer as POSITIVE value (not as a negative value). Express the numerical terms of your answer completely. For sample if your answer is one million dollars, write: 1000000" QUESTION 4 "What is the forecasted value of EBITDA for 2020? Express the numerical terms of your answer completely. For example: If your answer is one million dollars w 1000000 "What is the forecasted value of Net Income for 20207 Express the numerical terms of your answer completely. For example: If your answer is one million dollars, write: 1000000" QUESTION 6 "Before making additional balancing adjustments to the Balance Sheet what is the forecasted value of Cash and Equivalents for 20207 Express the numerical terms of your answer completely. For example: If your answer is one million dollars, write: 1000000" QUESTION 7 "Before making additional balancing adjustments to the Balance Sheet what is the forecasted value of Property. Plant and Equipment for 2020? Express the numerical terms of your answer completely. For example: If your answer is one million dollars, write: 1000000. QUESTIONS "Before making additional balancing adjustments to the Balance Sheet what is the forecasted value of Total Assets for 2020? Express the numerical terms of your answer completely. For example: if your answer is one million dollars, write: 1000000" QUESTION "Before making additional balancing adjustments to the Balance Sheet, what is the forecasted value of Total Liabilities for 20207 Express the numerical terms of your answer completely. For example: if your answer is one million dollars, write: 1000000" QUESTION 10 "Before making additional balancing adjustments to the Balance Sheet what is the forecasted value of Shareholder's Equity for 20207 Express the numerical terms of your answer completely. For example: If your answer is one million dollars, write: 1000000" QUESTION 11 "What is the estimate for Net New Financing for 2020? Note: Make sure you use the correct positive or negative sign. Express the numerical terms of your answer completely. For example: If your answer is one million dollars, write: 1000000" QUESTION 12 What option can the financial managers of Company Y implement in order to balance Total Assets and Total Liabilities and Equity for 20207 Increase the debt by the absolute value of the amount indicated in your calculations of net new financing Increase dividends by the absolute value of the amount indicated in your calculations of net new financing Ether of a. or b. would work Neither of a. or b. would work QUESTION 13 "Before making additional balancing adjustments to the Balance Sheet, what is the forecasted value of Net Working Capital for 2020? Express the numerical terms of your answer completely. For example of your answer is one million dollars, write: 1000000 QUESTION 14 "Before making additional balanding adjustments to the Balance Sheet, what is the forecasted increase of Net Working Capital for 20207 Express the numerical terms of your answer completely. For example of your answer is one million dollars, write: 1000000.- QUESTION 15 Before making additional balancing adjustments to the Balance Sheet, what is the forecasted value of Free Cash Flow for 20207 Express the numerical terms of your answer completely. For example: If your answer is one million dollars, write: 1000000.- QUESTION 16 "PARTIE Firm X is considering performing a considerable investment in year 2020. The value of Firm X(as of the end of 2019) If the investment is done is estimated at $285,145.269 Firm Value: Not doing 2019 2020 2021 2022 2023 Table the 2024 4,989,782 4,995,830 5,001,8625,007,878 5,013,881 Expansion Free Cash Flow of Firm EBITDA Interest Tax Shield 27,000 27,000 27,000 27,000 7,240,909 27,000 Assume a discount factor of Sfor the Free Cash Flows and the Continuation value and 10% for the interest Tax Shield. Assume that the EBITDA Multiple is 5. What is the present Values of the end of December 2019) of the Free Cash Flows forecast of Firm Xif the firm where not to do the expansion QUESTION 17 What is the present Value (as of the end of December 2015 of the Continuation value forecast of Prmxif the firm where not to do the expansion? QUESTION 19 What is the Firm Value las of the end of December 2019) of Firm Xif the firm where not to do the expansion? QUESTION 20 True or False Frm X should do the expansion (according to the NPV). Recall the value of Firm Xif the expansion is performed is estimated to be $285,145.269." True False