Rework problem $12-9$ from the current $(7$th edition$)$ textbook with the following changes. With the

exception of the changes mentioned, all other information in the problem remains unchanged. A sample

solution spreadsheet for the original problem has been posted on Moodle. If you choose to use that

spreadsheet as a basis for your work, you will need to modify it to match the changed assumptions. Note

that problem $12-9$ is one of those reviewed in class. Note also that this project uses the percentage of

sales approach.

Any required new external funding $($debt and equity$)$ is taken on at the beginning of the next year $(2020)$

in the problem. This means that you must account for the $$financing feedback effect$.$ Assume that there

were $100,000$ shares of common stock outstanding at the end of $2019.$ Each outstanding share $($existing$,$

plus any new$)$ will receive dividends during the upcoming year.

In this case we are not using a constant payout ratio, but rather are describing the dividend policy on a

dividend per share basis. This means the payout ratio may change in the forecasted year. In this version

each outstanding share will receive the new dividend of $$2\mathrm{.}00$ per share. Also, any new debt will be from

a line of credit which will carry a $12\%$ interest rate. The existing long$-$term debt will continue to carry a

$12\%$ interest rate.

Revised Assumptions:

The management team now forecasts that the firm$$s sales will grow at a rate of $15\%$ during the next year.

Any new external funding required would be raised $50\%$ from the sale of new common stock and $50\%$

from drawing on the line of credit.

New shares of common stock can be sold to investors at $$33$ per share, but the investment bankers will

take $5\%$ as their compensation. All existing common shares $($existing and any newly issued$)$ will receive

an annual dividend per share of $$2\mathrm{.}00$ next year. All existing long$-$term debt will carry an interest rate of

$12\mathrm{.}0\%$ in the forecast. New Short$-$term debt $($line of credit$)$ will also be at $12\%.$

In the event that the firm has excess funding under this plan, the excess funding should be used to

repurchase shares of stock at $$35.$ Due to an updated receivables management system, the required

percentage increase in accounts receivable is expected to be only half that of the percentage increase in

sales.

Calculate the firm$$s current ratio, total debt ratio, ROA, and ROE from both the existing $2019$ financial

statements and your completed $2020$ pro forma statements.