StartupCo commenced operations at the beginning of 2020. $125 million of equity was raised to fund the purchase of equipment as well as for general corporate purposes. As part of its business planning process, a 5-year forecast was developed (Base Case) as well as upside and downside scenarios (High and Low Cases, respectively). At the end of 2020, StartupCo issued $150 million of 5-year debt, repayable in equal annual installments at the end of each year, to finance its future capital program.

Model Inputs and Assumptions
General Assumptions
Forecast Scenario
Days Per Year				365
Capital Expenditure Assumptions
Asset Salvage Value (% of Capital Addition)				15%
Asset Useful Life				10 Years

1. Using the Low Case, calculate total depreciation expense for the year 2025E. Choose Answer:
   • $9,775
   • $17,500
   • $11,500
   • $14,875

2. Using the Low Case, calculate the interest coverage ratio (using EBITDA) for 2021E. Choose Answer:
   • .3x
   • 1.9x
   • .9x
   • 2.7x

3. Using the Low Case, calculate the asset-to-equity ratio in 2024E. Choose Answer:
   • 1.2x
   • .2x
   • 5.6x
   • 1.0x

Liabilities Accounts Payable Total Current Liabilities $5,000 $5,000 Long-Term Debt Total Liabilities $150,000 $155,000 Shareholders' Equity Share Capital Retained Earnings Total Shareholders' Equity Total Liabilities and Shareholders' Equity $125,000 $10,500 $135,500 $290,500 $10,500 Cash Flow Statement Operating Activities Net Income Adjustments For Depreciation Expense Changes in Non-Cash Working Capital Cash Generated From Operating Activities $8,500 $0 $19,000 Cash Generated From Operating Activities $19,000 Investing Activities Additions to Property, Plant & Equipment Cash (Used For) Investing Activities ($100,000) ($100,000) Financing Activities Issuance (Repayment) of Debt Issuance (Buy-back) of Equity Cash (Used For) Generated From Financing Activities $150,000 $125,000 $275,000 Cash (Used) Generated in the Period Cash & Cash Equivalents, Beginning of Period Cash & Cash Equivalents, End of Period $194,000 $0 $194,000 Low Case Income Statement Assumptions Annual Sales Growth Cost of Sales (% of Sales) SG&A Expense (% of Sales) 3.0% 45.0% 15.0% 3.0% 45.0% 15.0% 3.0% 45.0% 15.0% 3.0% 45.0% 15.0% 3.0% 45.0% 15.0% 5.0% Interest Rate Effective Tax Rate 5.0% 25.0% 5.0% 25.0% 5.0% 25.0% 5.0% 25.0% 25.0% 50 50 50 50 50 Balance Sheet Assumptions Accounts Receivable (Days) Accounts Payable (Days) Capital Expenditures 20 20 20 20 20 $15,00 $15,00 0 0 $0 $0 $15,00 0 $0 $15,00 0 $0 $15,00 0 $0 Equity Issued (Repaid)