Question1 (40 marks) Refer to Table 1. Write the Excel formula for each cell marked with "?" in column C such that formula could be copied and pasted into columns D and E using Microsoft Excel without further editing. There is no need to explicitly write the Excel formula for cells marked with "copy & paste". New Age Dolls makes the very successful line of Micky and Mimi dolls, which rapidly gained popularity with children and teenagers after only a few years on the market. New Age Dolls produces dolls at two locations: St. Louis (STL) and Boston (BSN), and has been leasing. warehouses at both locations. Warehouses are used for storage and for distribution to retail stores. New Age management is not happy with the terms of the leases, which are too expensive. The lease expires at the end of 2021. New Age management has decided to build its own warehouses and has three possible locations: Portland(PT), Atlanta (AT) and Phoenix (PX) (which is entered in cell C22), but New Age would construct warehouses at only two of these locations. To choose these two locations, New Age would like to forecast the net income, debt owed and cash flow for the following three years (2022 to 2024) based on 2021's data. You are asked to help New Age and write Excel formulas in cells C25 to C76 for this forecast by performing a what-if analysis using Microsoft Excel. One major factor that affects the forecast is the expected state of economy over the three years (2022 to 2024) in row 21: -Flat (F)- a steady economic outlook for a year Hot (H) - a heated-up economic outlook for a year The expected state of economy can vary from year to year. If the expected state of economy is H for year 2022, F for year 2023, and F for year 2024, then the pattern HFF would be entered in cells C21 to E21. Assume that there are no input errors (or typing mistakes) in row 21, or c22 cell. New Age management expects to sell all the dolls they produce in Boston and St. Louis in the three years (2022 to 2024). Production of the two types of dolls will be divided evenly between the two locations. The expected production (and sales) levels are given below: Year 2022 Year 2023 Year 2024 Micky St. Louis 500,000 (cell C4) 750,000 (cell D4) 1,000,000 (cell E4) Mimi-St. Louis 750,000 (cell C5) 850,000 (cell D5 1,000,000 (cell ES) Micky- Boston 500,000 (cell C6) 750,000 (cell D6) 1,000,000 (cell E6) Mimi- Boston 750,000 (cell C7) 850.000 (cell D71,000,000 (cell E7) The following constants (rows 15 to 17) for the forecast are described below: Tax rate (row 15): The corporate tax rate is expected to increase from 29% for year 2022 to 31% for year 2024. Minimum cash needed to start next year (row 16): A New Age's policy is to have at least US$10,000 cash on hand at the end of each year, in order to start next year's business. It is assumed that New Age's banker will lend whatever is needed at the end of a year to begin the next year with US$10,000. Administrative costs will be fixed at US$1,200,000 each year. Calculations (rows 25 to 49) are described below: Interest rate on debt (row 25): If the expected state of economy is flat (F) in a year, the interest rate paid on debt owed will be 8%, but it will be 10% if the expected stated of economy is heating up in a year. Number of dolls shipped from a factory location to a warehouse location (rows 27 to 32): If a warehouse site is not selected, then no dolls are shipped, otherwise a factory's doll production number is divided evenly between the two selected warehouse sites. . Shipping and warehousing costs for dolls shipped from a factory location to a warehouse location (rows 34 to 39): this is a function of the number of dolls shipped, and the shipping and storage costs per doll. New Age management does not consider cents as cents do not worth much and do not affect costs much. Selling prices of Micky and Mimi (rows 40 and 41): In 2021, the selling price for a Micky doll is US$11.25 (cell B40), and for a Mimi doll, it is US$12.25(cell B41), as Mimi is more popular than Micky. If the economy remains steady, then the selling prices for Micky and Mimi are not expected to change from years 2022 to 2024. However, if the economy inflates or "heats up", then the selling prices for Micky and Mimi would rise 4% from one year to the next. each type of dolls would be a function of the number of dolls sold and the selling price of each doll. New Age management does not consider cents as cents do not worth much and do not affect revenue much. Production and marketing costs for each doll made at St. Louis and Boston (rows 45 to 46): In 2021, it costs US$5.0 (cell B45) to make and market a St. Louis-made doll and US$5.50 (cell B46) to make and market a Boston-made doll. Production and marketing costs are expected to increase in the following three years whether the economy could be flat or heat up; as New Age management sees no chance of an economic downturn in the following three years. The expected year-to-year percentage increase in production and marketing costs are given below: Dolls made in St. Louis 1% per year Flat Economy Economy Heats up 15% per year 5% per year Dolls made in Boston 2% per year . Total production and marketing costs for all the dolls made at each factory site (rows 48 and 49): these costs are a function of the number of dolls made at that factory site and the production and marketing cost for each doll made at that factory site. New Age management does not consider cents as cents do not worth much and do not affect these costs much. Income & Cash Flow Statements (rows 53 to 70) are described below: - Beginning of year cash on hand (row 53): this is the cash at the end of the previous year. - Revenue sales (row 55): this is the total revenue from sales of all the dolls made at both factory sites. - Production and marketing costs (row 57): this is the total production and marketing costs for all the dolls made at both factory sites. Shipping and warehouse costs (row 58): this is the total shipping and warehouse costs for all the dolls shipped from both factory sites to all three warehouse locations. . Fixed administrative costs (row 59): this is the constant administrative costs for each year. - Total costs (row 60): these costs include production, marketing, shipping, warehousing and fixed administrative costs for all the dolls made and sold during that year. Pre-interest expense margin (row 61): Before considering tax and interest expense, this is the difference between total revenue and total costs. . Interest expense (row 62): this is a simple interest based on the year's interest rate and the debt owed at the beginning of that year. considering interest expense, this is the difference between pre- interest expense margin, and interest expense. Income tax expense (row 64): This is zero if income before tax is zero or less; otherwise, apply the tax rate for the year to the income before tax. Net income after tax (row 65): This is the difference between income before tax and income tax expense. .Net Cash Position (NCP) (row 67): NCP at the end of a year equals the cash beginning of a year, plus the year's net income, assuming that there are no receivables or payables. Assume that New Age's bankers will lend enough money (row 68) at the end of a year to get to New Age's minimum cash target (see row 16). If the NCP is less than the minimum cash at the end of a year, New Age must borrow enough to reach the minimum cash target. Borrowings increase cash on hand, of course. . If the NCP is more than the minimum cash and there is outstanding debt from previous year(s), then some or all of the debt should be repaid, but not to take your company below the minimum cash level (row 69). Cash at the end of the year equals the NCP, plus any borrowings and less any repayments (row 70). Debt Owed (rows 73 to 76) is described below: The amount of US$3 million (cell B76) is already owed to bankers and bondholders at the end of 2021. Debt owed at the beginning of a year equals the debt owed at the end of the previous year. Amounts borrowed and repaid that have been calculated before can be echoed to this section. The amount owed at the end of a year equals to the debt owed at the beginning of the year plus any borrowings, and less any repayments. Applica cell. 3 CONSTANTS 4 Micky PRODUCTION - STL 5 Mimi PRODUCTION - STL 6 Micky PRODUCTION - BSN Mimi PRODUCTION - BSN 7 PER UNIT SHIPPING AND 8 WAREHOUSING COSTS (FROM-TO) 9 STL --> PT 10 STL --> AT 11 STL --> PX 12 BSN-PT 13 BSN --> AT 14 BSN--> PX 15 TAX RATE EXPECTED 16 MIN CASH RORD AT END OF YR 17 FIXED ADMINISTRATIVE COSTS 20 INPUTS EXPECTED STATE OF ECONOMY: 21 F = FLAT, H = HOT WAREHOUSE LOCATION NOT USED: PT = PORTLAND, 22 AT = ATLANTA: PX = PHOENIX 24 CALCULATIONS 25 INTEREST RATE FOR YEAR 26 NUMBER OF DOLLS SHIPPED 27 FROM STL TO PT FROM STL TO AT 29 FROM STL TO PX 30 FROM BSN TO PT 31 FROM BSN TO AT FROM BSN TO PX 33 SHIPPING & WAREHOUSING COSTS 34 FROM STL TO PT FROM STL TO AT 36 FROM STL TO PX 37 FROM BSN TO PT FROM BSN TO AT 39 FROM BSN TO PX 40 UNIT SELLING PRICE -Micky 41 UNIT SELLING PRICE - Mimi 42 SALES REVENUE -Micky 43 SALES REVENUE - Mimi 44 UNIT PRODUCTION & MARKETING COSTS. 45 ST LOUIS (BOTH DOLLS) 5 46 BSN (BOTH DOLLS) 5.5 47 TOTAL PRODUCTION & MARKETING COST: 48 ST LOUIS (BOTH DOLLS) 49 BOSTON (BOTH DOLLS) 1238583858 2388588 B 2021 2022 500000 NA NA 750000 NA 500000 NA 750000 NA 4.5 NA 5.5 NA 3.5 NA 6 NA 4.5 NA 5.5 NA 0.29 NA 10000 NA 1200000 2022 H PT 2021 NA NA C B C 2021 2022 NA ? [1.5 marks] NA ?[1.5 marks] NA ?[1.5 marks] NA ?[1.5 marks] NA ?[1.5 marks] NA ?[1.5 marks] NA ?[1.5 marks] NA ? [1 mark] NA ?[1 mark] NA ?[1 mark] NA ?[1 mark] NA ?[1 mark] NA ?[1 mark] ?[1.5 marks] 11.25 12.25 ?[1.5 marks] NA NA ? [1 mark] ?[1 mark] ? [1.5 marks] ? [1.5 marks] ?[1 mark] ?[1 mark] NA NA D 2023 750000 850000 750000 850000 4.95 6.05 3.85 6.6 4.95 6.05 0.3 10000 1200000 2023 F NA D 2023 copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste E 2024 1000000 1000000 1000000 1000000 5.45 6.66 4.24 7.26 5.45 6.66 0.31 10000 1200000 2024 F NA E 2024 copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste B A INCOME STATEMENT AND 52 CASH FLOW STATEMENT 53 BEGINNING OF YEAR CASH ON HAND 55 REVENUE (SALES) 56 COSTS AND EXPENSES 57 PRODUCTION AND MARKETING COSTS 58 SHIPPING AND WAREHOUSE COSTS 59 FIXED ADMIN COSTS 60 TOTAL COSTS 61 PRE-INTEREST EXPENSE MARGIN 62 INTEREST EXPENSE 63 INCOME BEFORE TAX 64 TAX EXPENSE 65 NET INCOME NET CASH POSITION (NCP) BEFORE BORROWINGS AND REPAYMENTS OF 67 DEBT (BEG CASH PLUS NET INCOME) 68 ADD: BORROWINGS FROM BANK 69 LESS: REPAYMENTS TO BANK 70 EQUALS: END OF YEAR CASH ON HAND 10000 72 DEBT OWED 73 OWED TO BANK AT BEGINNING OF YEAR 74 ADD: BORROWINGS FROM BANK 75 LESS: REPAYMENTS TO BANK 76 EQUALS: OWED TO BANK AT END OF YEAR 3000000 2021 NA NA NA NA 2022 ? [0.25 mark] 2 [0.5 mark] ? [0.5 mark] ? [0.5 mark] ? [0.25 mark] ? [0.5 mark] ? [0.5 mark] ? [1 mark] ? [0.25 mark] ? [1 mark] ? [0.5 mark] ? [0.5 mark] ? [1.5 marks] ? [4 marks] ? [0.5 mark] ? [0.25 mark] ? [0.25 mark] ? [0.25 mark] ? [0.5 mark] 2023 copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste E 2024 copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste Question1 (40 marks) Refer to Table 1. Write the Excel formula for each cell marked with "?" in column C such that formula could be copied and pasted into columns D and E using Microsoft Excel without further editing. There is no need to explicitly write the Excel formula for cells marked with "copy & paste". New Age Dolls makes the very successful line of Micky and Mimi dolls, which rapidly gained popularity with children and teenagers after only a few years on the market. New Age Dolls produces dolls at two locations: St. Louis (STL) and Boston (BSN), and has been leasing. warehouses at both locations. Warehouses are used for storage and for distribution to retail stores. New Age management is not happy with the terms of the leases, which are too expensive. The lease expires at the end of 2021. New Age management has decided to build its own warehouses and has three possible locations: Portland(PT), Atlanta (AT) and Phoenix (PX) (which is entered in cell C22), but New Age would construct warehouses at only two of these locations. To choose these two locations, New Age would like to forecast the net income, debt owed and cash flow for the following three years (2022 to 2024) based on 2021's data. You are asked to help New Age and write Excel formulas in cells C25 to C76 for this forecast by performing a what-if analysis using Microsoft Excel. One major factor that affects the forecast is the expected state of economy over the three years (2022 to 2024) in row 21: -Flat (F)- a steady economic outlook for a year Hot (H) - a heated-up economic outlook for a year The expected state of economy can vary from year to year. If the expected state of economy is H for year 2022, F for year 2023, and F for year 2024, then the pattern HFF would be entered in cells C21 to E21. Assume that there are no input errors (or typing mistakes) in row 21, or c22 cell. New Age management expects to sell all the dolls they produce in Boston and St. Louis in the three years (2022 to 2024). Production of the two types of dolls will be divided evenly between the two locations. The expected production (and sales) levels are given below: Year 2022 Year 2023 Year 2024 Micky St. Louis 500,000 (cell C4) 750,000 (cell D4) 1,000,000 (cell E4) Mimi-St. Louis 750,000 (cell C5) 850,000 (cell D5 1,000,000 (cell ES) Micky- Boston 500,000 (cell C6) 750,000 (cell D6) 1,000,000 (cell E6) Mimi- Boston 750,000 (cell C7) 850.000 (cell D71,000,000 (cell E7) The following constants (rows 15 to 17) for the forecast are described below: Tax rate (row 15): The corporate tax rate is expected to increase from 29% for year 2022 to 31% for year 2024. Minimum cash needed to start next year (row 16): A New Age's policy is to have at least US$10,000 cash on hand at the end of each year, in order to start next year's business. It is assumed that New Age's banker will lend whatever is needed at the end of a year to begin the next year with US$10,000. Administrative costs will be fixed at US$1,200,000 each year. Calculations (rows 25 to 49) are described below: Interest rate on debt (row 25): If the expected state of economy is flat (F) in a year, the interest rate paid on debt owed will be 8%, but it will be 10% if the expected stated of economy is heating up in a year. Number of dolls shipped from a factory location to a warehouse location (rows 27 to 32): If a warehouse site is not selected, then no dolls are shipped, otherwise a factory's doll production number is divided evenly between the two selected warehouse sites. . Shipping and warehousing costs for dolls shipped from a factory location to a warehouse location (rows 34 to 39): this is a function of the number of dolls shipped, and the shipping and storage costs per doll. New Age management does not consider cents as cents do not worth much and do not affect costs much. Selling prices of Micky and Mimi (rows 40 and 41): In 2021, the selling price for a Micky doll is US$11.25 (cell B40), and for a Mimi doll, it is US$12.25(cell B41), as Mimi is more popular than Micky. If the economy remains steady, then the selling prices for Micky and Mimi are not expected to change from years 2022 to 2024. However, if the economy inflates or "heats up", then the selling prices for Micky and Mimi would rise 4% from one year to the next. each type of dolls would be a function of the number of dolls sold and the selling price of each doll. New Age management does not consider cents as cents do not worth much and do not affect revenue much. Production and marketing costs for each doll made at St. Louis and Boston (rows 45 to 46): In 2021, it costs US$5.0 (cell B45) to make and market a St. Louis-made doll and US$5.50 (cell B46) to make and market a Boston-made doll. Production and marketing costs are expected to increase in the following three years whether the economy could be flat or heat up; as New Age management sees no chance of an economic downturn in the following three years. The expected year-to-year percentage increase in production and marketing costs are given below: Dolls made in St. Louis 1% per year Flat Economy Economy Heats up 15% per year 5% per year Dolls made in Boston 2% per year . Total production and marketing costs for all the dolls made at each factory site (rows 48 and 49): these costs are a function of the number of dolls made at that factory site and the production and marketing cost for each doll made at that factory site. New Age management does not consider cents as cents do not worth much and do not affect these costs much. Income & Cash Flow Statements (rows 53 to 70) are described below: - Beginning of year cash on hand (row 53): this is the cash at the end of the previous year. - Revenue sales (row 55): this is the total revenue from sales of all the dolls made at both factory sites. - Production and marketing costs (row 57): this is the total production and marketing costs for all the dolls made at both factory sites. Shipping and warehouse costs (row 58): this is the total shipping and warehouse costs for all the dolls shipped from both factory sites to all three warehouse locations. . Fixed administrative costs (row 59): this is the constant administrative costs for each year. - Total costs (row 60): these costs include production, marketing, shipping, warehousing and fixed administrative costs for all the dolls made and sold during that year. Pre-interest expense margin (row 61): Before considering tax and interest expense, this is the difference between total revenue and total costs. . Interest expense (row 62): this is a simple interest based on the year's interest rate and the debt owed at the beginning of that year. considering interest expense, this is the difference between pre- interest expense margin, and interest expense. Income tax expense (row 64): This is zero if income before tax is zero or less; otherwise, apply the tax rate for the year to the income before tax. Net income after tax (row 65): This is the difference between income before tax and income tax expense. .Net Cash Position (NCP) (row 67): NCP at the end of a year equals the cash beginning of a year, plus the year's net income, assuming that there are no receivables or payables. Assume that New Age's bankers will lend enough money (row 68) at the end of a year to get to New Age's minimum cash target (see row 16). If the NCP is less than the minimum cash at the end of a year, New Age must borrow enough to reach the minimum cash target. Borrowings increase cash on hand, of course. . If the NCP is more than the minimum cash and there is outstanding debt from previous year(s), then some or all of the debt should be repaid, but not to take your company below the minimum cash level (row 69). Cash at the end of the year equals the NCP, plus any borrowings and less any repayments (row 70). Debt Owed (rows 73 to 76) is described below: The amount of US$3 million (cell B76) is already owed to bankers and bondholders at the end of 2021. Debt owed at the beginning of a year equals the debt owed at the end of the previous year. Amounts borrowed and repaid that have been calculated before can be echoed to this section. The amount owed at the end of a year equals to the debt owed at the beginning of the year plus any borrowings, and less any repayments. Applica cell. 3 CONSTANTS 4 Micky PRODUCTION - STL 5 Mimi PRODUCTION - STL 6 Micky PRODUCTION - BSN Mimi PRODUCTION - BSN 7 PER UNIT SHIPPING AND 8 WAREHOUSING COSTS (FROM-TO) 9 STL --> PT 10 STL --> AT 11 STL --> PX 12 BSN-PT 13 BSN --> AT 14 BSN--> PX 15 TAX RATE EXPECTED 16 MIN CASH RORD AT END OF YR 17 FIXED ADMINISTRATIVE COSTS 20 INPUTS EXPECTED STATE OF ECONOMY: 21 F = FLAT, H = HOT WAREHOUSE LOCATION NOT USED: PT = PORTLAND, 22 AT = ATLANTA: PX = PHOENIX 24 CALCULATIONS 25 INTEREST RATE FOR YEAR 26 NUMBER OF DOLLS SHIPPED 27 FROM STL TO PT FROM STL TO AT 29 FROM STL TO PX 30 FROM BSN TO PT 31 FROM BSN TO AT FROM BSN TO PX 33 SHIPPING & WAREHOUSING COSTS 34 FROM STL TO PT FROM STL TO AT 36 FROM STL TO PX 37 FROM BSN TO PT FROM BSN TO AT 39 FROM BSN TO PX 40 UNIT SELLING PRICE -Micky 41 UNIT SELLING PRICE - Mimi 42 SALES REVENUE -Micky 43 SALES REVENUE - Mimi 44 UNIT PRODUCTION & MARKETING COSTS. 45 ST LOUIS (BOTH DOLLS) 5 46 BSN (BOTH DOLLS) 5.5 47 TOTAL PRODUCTION & MARKETING COST: 48 ST LOUIS (BOTH DOLLS) 49 BOSTON (BOTH DOLLS) 1238583858 2388588 B 2021 2022 500000 NA NA 750000 NA 500000 NA 750000 NA 4.5 NA 5.5 NA 3.5 NA 6 NA 4.5 NA 5.5 NA 0.29 NA 10000 NA 1200000 2022 H PT 2021 NA NA C B C 2021 2022 NA ? [1.5 marks] NA ?[1.5 marks] NA ?[1.5 marks] NA ?[1.5 marks] NA ?[1.5 marks] NA ?[1.5 marks] NA ?[1.5 marks] NA ? [1 mark] NA ?[1 mark] NA ?[1 mark] NA ?[1 mark] NA ?[1 mark] NA ?[1 mark] ?[1.5 marks] 11.25 12.25 ?[1.5 marks] NA NA ? [1 mark] ?[1 mark] ? [1.5 marks] ? [1.5 marks] ?[1 mark] ?[1 mark] NA NA D 2023 750000 850000 750000 850000 4.95 6.05 3.85 6.6 4.95 6.05 0.3 10000 1200000 2023 F NA D 2023 copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste E 2024 1000000 1000000 1000000 1000000 5.45 6.66 4.24 7.26 5.45 6.66 0.31 10000 1200000 2024 F NA E 2024 copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste B A INCOME STATEMENT AND 52 CASH FLOW STATEMENT 53 BEGINNING OF YEAR CASH ON HAND 55 REVENUE (SALES) 56 COSTS AND EXPENSES 57 PRODUCTION AND MARKETING COSTS 58 SHIPPING AND WAREHOUSE COSTS 59 FIXED ADMIN COSTS 60 TOTAL COSTS 61 PRE-INTEREST EXPENSE MARGIN 62 INTEREST EXPENSE 63 INCOME BEFORE TAX 64 TAX EXPENSE 65 NET INCOME NET CASH POSITION (NCP) BEFORE BORROWINGS AND REPAYMENTS OF 67 DEBT (BEG CASH PLUS NET INCOME) 68 ADD: BORROWINGS FROM BANK 69 LESS: REPAYMENTS TO BANK 70 EQUALS: END OF YEAR CASH ON HAND 10000 72 DEBT OWED 73 OWED TO BANK AT BEGINNING OF YEAR 74 ADD: BORROWINGS FROM BANK 75 LESS: REPAYMENTS TO BANK 76 EQUALS: OWED TO BANK AT END OF YEAR 3000000 2021 NA NA NA NA 2022 ? [0.25 mark] 2 [0.5 mark] ? [0.5 mark] ? [0.5 mark] ? [0.25 mark] ? [0.5 mark] ? [0.5 mark] ? [1 mark] ? [0.25 mark] ? [1 mark] ? [0.5 mark] ? [0.5 mark] ? [1.5 marks] ? [4 marks] ? [0.5 mark] ? [0.25 mark] ? [0.25 mark] ? [0.25 mark] ? [0.5 mark] 2023 copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste E 2024 copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste copy & paste
