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Use the following information on Company Y and perform pro-forma financial modeling using a planned expansion method to answers the next two questions. To do this assume that the percentage values with respect to sales of the (1) costs except depreciation, (ii) cash and equivalents, (iii) accounts receivable, (iv) inventories, and (v) accounts payable will stay fixed at the values corresponding for 2020. Assume also that income tax will remain at 35% of the Pretax Income. Consider Company Y. This firm sells a product for which in 2020 the total market size was of 1000000 units, of which Company Yowned a share of 40%. Both, the total market size and Company Y's market share are expected to grow at a 6% yearly rate for the next five years. The price of the product is $100 in 2020 and is expected to remain at that price for the next years. TABLE 21 Market Analysis 2020 2021 1,000,000 1,060,000 40% 42% 2022 1,123,600 45% 2023 1,191,016 48% Market Size Market Share Production Volume Sales Price: Sales 400,000 100.00 S In 2020, the outstanding debt of Company Y is $500000, for which the company makes yearly interest payments of 10%. The executives of Company Y are considering making a significant capital investment in 2021 of $4000000 to purchase new machinery. The company plans to finance this investment with a 30-year loan that makes yearly interest payments equivalent to 7% of its principal. The principal is paid when the loan matures. The following table summarizes the debt and interest payment of Company Y. 2020 500,000 2021 500,000 2022 4,500,000 TABLEB.2 Debt and Interest Table Outstanding Debt New Net Borrowing Interest on Debt 4,000,000 Currently, Company Y makes yearly expenditures on replacement capital investment of 590000, if the company makes the planned expansion it is decided the company will perform yearly expenditures on replacement capital investment of $325000. The current and the planned expenditures on replacement of capital investment will be financed by the company's cash flow The following table indicates for 2020 Company Y's values of i. opening book value, li. capital investment, i. depreciation, and iv. closing book value. The Table also indicates the 2021-2022 forecast values of capital depreciation if the planned expansion were to occur in 2021. TABLE 2020 2021 2022 Fixed Assets & Capital Investment Opening Book Value Capital Investment Depreciation Closing Book Value 1,500,000 90,000 -127,200 1.462,800 -444,224 -434,686 The following table contains Company Y's income statement for 2020, TABLE4 2020 2021 Income Statement: Sales Costs except Depr. EBITDA Depreciation COM 40,000,000 -2,400,000 37,600,000 -127.200 11 Depreciation EBIT Interest Expense (net) Pretax Income Income Tax Net Income -127,200 37,472,800 -50,000 37,422,800 -13,097,980 24,324,820 The following table contains Company Y's balance sheet for 2020. TABLEB.S 2020 2021 Balance Sheet Assets Cash and Equivalents Accounts Receivable Inventories Total Current Assets Property Plant Equipment Total Assets 18,000,000 14,000,000 10,000,000 42,000,000 and 1,462,800 43,462,800 Liabilities and Equity Accounts Payable 14,000,000 Total Current Liabilities 14,000,000 Debt Total Liabilities Stockholders' Equity 500,000 14,500,000 Total Current Liabilities 14,000,000 Debt Total Liabilities Stockholders' Equity 500,000 14,500,000 5,000,000 Starting Stockholders' Equity Net Income Dividends Stockholders' Equity 24,324,820 -362,020 28,962,800 43,462,800 Total Liabilities & Equity Question: Before making any adjustments to balance Total Assets with Total Liabilities and Equity, what is Company Y's forecast value of Total Liabilities and Equity for 2021? QUESTION 9 Question: How much are the net new financing for Company Y 5 on 2021? Use the following information on Company Y and perform pro-forma financial modeling using a planned expansion method to answers the next two questions. To do this assume that the percentage values with respect to sales of the (1) costs except depreciation, (ii) cash and equivalents, (iii) accounts receivable, (iv) inventories, and (v) accounts payable will stay fixed at the values corresponding for 2020. Assume also that income tax will remain at 35% of the Pretax Income. Consider Company Y. This firm sells a product for which in 2020 the total market size was of 1000000 units, of which Company Yowned a share of 40%. Both, the total market size and Company Y's market share are expected to grow at a 6% yearly rate for the next five years. The price of the product is $100 in 2020 and is expected to remain at that price for the next years. TABLE 21 Market Analysis 2020 2021 1,000,000 1,060,000 40% 42% 2022 1,123,600 45% 2023 1,191,016 48% Market Size Market Share Production Volume Sales Price: Sales 400,000 100.00 S In 2020, the outstanding debt of Company Y is $500000, for which the company makes yearly interest payments of 10%. The executives of Company Y are considering making a significant capital investment in 2021 of $4000000 to purchase new machinery. The company plans to finance this investment with a 30-year loan that makes yearly interest payments equivalent to 7% of its principal. The principal is paid when the loan matures. The following table summarizes the debt and interest payment of Company Y. 2020 500,000 2021 500,000 2022 4,500,000 TABLEB.2 Debt and Interest Table Outstanding Debt New Net Borrowing Interest on Debt 4,000,000 Currently, Company Y makes yearly expenditures on replacement capital investment of 590000, if the company makes the planned expansion it is decided the company will perform yearly expenditures on replacement capital investment of $325000. The current and the planned expenditures on replacement of capital investment will be financed by the company's cash flow The following table indicates for 2020 Company Y's values of i. opening book value, li. capital investment, i. depreciation, and iv. closing book value. The Table also indicates the 2021-2022 forecast values of capital depreciation if the planned expansion were to occur in 2021. TABLE 2020 2021 2022 Fixed Assets & Capital Investment Opening Book Value Capital Investment Depreciation Closing Book Value 1,500,000 90,000 -127,200 1.462,800 -444,224 -434,686 The following table contains Company Y's income statement for 2020, TABLE4 2020 2021 Income Statement: Sales Costs except Depr. EBITDA Depreciation COM 40,000,000 -2,400,000 37,600,000 -127.200 11 Depreciation EBIT Interest Expense (net) Pretax Income Income Tax Net Income -127,200 37,472,800 -50,000 37,422,800 -13,097,980 24,324,820 The following table contains Company Y's balance sheet for 2020. TABLEB.S 2020 2021 Balance Sheet Assets Cash and Equivalents Accounts Receivable Inventories Total Current Assets Property Plant Equipment Total Assets 18,000,000 14,000,000 10,000,000 42,000,000 and 1,462,800 43,462,800 Liabilities and Equity Accounts Payable 14,000,000 Total Current Liabilities 14,000,000 Debt Total Liabilities Stockholders' Equity 500,000 14,500,000 Total Current Liabilities 14,000,000 Debt Total Liabilities Stockholders' Equity 500,000 14,500,000 5,000,000 Starting Stockholders' Equity Net Income Dividends Stockholders' Equity 24,324,820 -362,020 28,962,800 43,462,800 Total Liabilities & Equity Question: Before making any adjustments to balance Total Assets with Total Liabilities and Equity, what is Company Y's forecast value of Total Liabilities and Equity for 2021? QUESTION 9 Question: How much are the net new financing for Company Y 5 on 2021
