Pro-forma Projections Today's date is 10/01/20X2. NicheRealty, Inc. expects its sales to grow at a healthy 12% over the next two years. Assuming the company operates going forward as follows Capx will be set to 10% of Sales . The average useful life of the firm's net PPE is 8 years Total debt will be held constant, and cash will be held at a constant % of fiscal year 20X1 sales ("FY 20Xl sales," where FY 20X1 ended on 9/30/20X1) No dividends will be paid. Interest Expense, Income Tax Expense and other items are all calculated in future years as described in class and the IBF text. . NicheRealty's board of directors would like to know what is needed to maintain this level of sales growth. In particular, will they have to raise equity (PIC) in FY 20X2 and/or 20X3, and if so by how much? Use pro-forma projections to answer the board's questions. ratios and quantities in the below statements Show your work by filling in the appropriate Notes and hints: . For some items, you are given how to project forward (% of Sales" or "See Roll Forward Equation", etc). For some items, you must decide how to project forward. A PIC outflow (reduction in PIC) would correspond to a stock buyback (the opposite of selling shares to bring cash into the firm). Project all "% of sales" quantities as proportional to FY 20X1 sales, not the average of 20X0 and 0X1 Interest Expense in future years can be found by using historical info to find the interest rate (%) the company pays on its debt. Tax Expense can be found similarly by using historical info to determine the company's tax rate. In this case, solve for PIC by establishing EOY Equity from the BS (E Equity is also found by E(EOY)-E(BOY) +NI- Div + PIC. Solve this second equation for PIC. . . A-L), then insist that EOY . Pro-forma Projections Today's date is 10/01/20X2. NicheRealty, Inc. expects its sales to grow at a healthy 12% over the next two years. Assuming the company operates going forward as follows Capx will be set to 10% of Sales . The average useful life of the firm's net PPE is 8 years Total debt will be held constant, and cash will be held at a constant % of fiscal year 20X1 sales ("FY 20Xl sales," where FY 20X1 ended on 9/30/20X1) No dividends will be paid. Interest Expense, Income Tax Expense and other items are all calculated in future years as described in class and the IBF text. . NicheRealty's board of directors would like to know what is needed to maintain this level of sales growth. In particular, will they have to raise equity (PIC) in FY 20X2 and/or 20X3, and if so by how much? Use pro-forma projections to answer the board's questions. ratios and quantities in the below statements Show your work by filling in the appropriate Notes and hints: . For some items, you are given how to project forward (% of Sales" or "See Roll Forward Equation", etc). For some items, you must decide how to project forward. A PIC outflow (reduction in PIC) would correspond to a stock buyback (the opposite of selling shares to bring cash into the firm). Project all "% of sales" quantities as proportional to FY 20X1 sales, not the average of 20X0 and 0X1 Interest Expense in future years can be found by using historical info to find the interest rate (%) the company pays on its debt. Tax Expense can be found similarly by using historical info to determine the company's tax rate. In this case, solve for PIC by establishing EOY Equity from the BS (E Equity is also found by E(EOY)-E(BOY) +NI- Div + PIC. Solve this second equation for PIC. . . A-L), then insist that EOY