Please use an excel sheet. and please be descriptive in every step with formulas. If possible, you can directly email me the answer in an excel sheet as an attachment, so I can see what formulas have been used. Thanks much.

Question one Info if needed!

Question 3. The quarterly investors call is approaching and you were asked to comment on the EPS and projected EPS based on the growth forecast of 10%. (a) Compute the EPS for the Current Fiscal Year (b) What is the projected EPS with the same assumptions as in Question 1? You are a bit skeptical of the projected 10% growth in sales and decided to look at a much less aggressive long-run growth scenario of 3.5% growth in sales. (c) What is the projected EPS for a 3.5% growth in sales? If the dividend payout ratio remains the same, how much is paid per share? As some external financing will be needed to accommodate any growth, you started looking into raising debt and/or equity. Since your company would be mostly described as a small- cap US company, you looked at market data to help you determine your costs of equity and debt. (d) Using the information on slide 9 on the deck from Week 4 - Part I, what should be the risk premium for appropriate market for your company? Assume the risk free is given by Imo Treasury Bills. (e) Looking at historical stock market data, you determined that your beta is roughly 1.4 with respect to the market benchmark you used above to compute the risk premium. What should your cost of equity be? (f) In order to get a little more comfortable with the number com above, you decided to look at the cost of equity using the dividend growth corresponding to the 3.5% sales growth scenario from (c). If you decide to use the average dividend growth value from last 8 years, what is the cost of equity using this approach? Do you think this is a reliable number? If so, why not? In order to determine your cost of debt, you decided to look at your long term debt, which is structured as a single 20yr bond with semi-annual coupons, a coupon rate of 10%, and is currently trading at 83%. (g) What is your cost of debt? (h) What is your after-tax cost of debt? Your CEO is interested in knowing what is the minimum return the company should generate to make sure investors are satisfied, but is not sure which number to focus on. (i) What measure should you propose and how would you explain it to your CEO? 6) What is the value for the proposed measure? Income Statement Sales $43,000,000 Taxes: 40% COGS Other expenses Depreciation EBIT Interest Taxable income Taxes (40%) Net income $30,000,000 $5,000,000 $2,000,000 $6,000,000 $2,000,000 $4,000,000 $1,600,000 $2,400,000 Shares Outstanding Market-to-Book Ratio Depreciation of New Assets Dividend growth in the last 7 years 1,000,000 1.25 25.00% 8.00% Dividends Add to RE $600,000 $1,800,000 Balance Sheet Assets Liabilities & Owners' Equity Current Assets Cash Accounts Receivable Inventory Current Liabilities Accounts Payable Notes Payable $500,000 $1,000,000 $2,000,000 $3,500,000 $1,000,000 $3,000,000 $4,000,000 $10,000,000 Total CL Total C Fixed Assets Net PP&E Long Term Debt Owners' Equity Common Stock Retained Earnings $25,000,000 Total Equity $6,500,000 $8,000,000 $14,500,000 $28.500.000 Total Assets $28,500,000 Total L & OE You just started a new job as a Finance Manager at XYZ Corp. As you are starting to get acquainted with the company, you requested the Balance Sheet for the Current Fiscal Year 2018, the Income Statement and a few other items that you deemed appropriate. You can find all of those in the table below and in the Excel file attached. Income Statement for the Current Fiscal Year Sales $43.000.000 COGS $30,000,000 Other expenses $5,000,000 Depreciation $2,000,000 EBIT $6,000,000 Interest $2.000.000 Taxable income $4.000.000 Taxes (40%) $1,600,000 Net Income $2,000,000 Dividends Add to RE S600,000 $1,800,000 Balance Sheet, Current Fiscal Year Assets Current Amets Cash $500.000 Accounts Receivable $1.000.000 Inventory $2.000.000 Total CA $3,500,000 Fixed Assets Net PP&E $25.000.000 Liabilities & Owners' Equity Current Liabilities Accounts Payable $1.000.000 Notes Payable $3,000.000 Total CL $4,000,000 Long Term Debt $10,000,000 Owners' Equity Common Stock $6.500.000 Retained Earnings $8,000,000 Total Equity $14.500.000 Total L & OE $28,500,000 Total Assets $28,500,000 Additional information Taxes 40% Market-to-Book Ratio 1.25 Shares Outstanding 1,000,000 Depreciation of New Assets 25.00% Dividend growth in the last 7 years 8.00% Note: The Market-to-Book Ratio is equal to the Market Viile per Share divided by the Book Value per Share. The Book Value per Share is the Total Owners' Equity divided by the number of outstanding shares. This and other financial statements ratios can be found on Chapter 3 in the textbook 2 Question 1. As you are trying to get a better grasp of the growth potential of the company, you decide to look the the IR and SGR numbers. (a) Compute the IR and SGR. (6) What do each of those mean? One of your analysts mentioned that the Marketing and Sales departments are forecasting a growth in sales of 10%. Additionally, the same analyst informed you that the firm is at capacity right now and any further growth would require an investment in fixed assets of $5 million dollars. Before your meeting with the new CEO, you decided to get a sense of what the impact of such growth would be: (e) What is the EFN for a growth of 10% in sales and the capacity assumption above? Also assume that the dividend payout ratio remains constant, and that cost of goods sold, current assets and accounts payable grow proportionally to sales. (4) What does the number you computed mean? (e) Suppose you decide to raise any needed capital through long term debt with no interest payments in the coming year. What is your new Debt-Equity Ratio? Is it larger or smaller than the Debt-Equity Ratio you currently have? Does it contradict the numbers for the EGR or the SGR you computed before? Why is that