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The company's number of shares outstanding is 5,000,000. a. Assume that the company was operating at full capacity in 2021 with regard to all items

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The company's number of shares outstanding is 5,000,000. a. Assume that the company was operating at full capacity in 2021 with regard to all items except fixed assets, which in 2021 were being utilized to only 90% of capacity. By what percentage could 2022 sales increase over 2021 sales without the need for an increase in fixed assets b. Now suppose that 2022 sales increase by 25% over 2021 sales. Use the forecasted financial statement method to forecast 31/12/2022 balance sheet and 2022 income statement, assuming that (1) any required external financing is done at the end of 2022 as long term bond; and (5) the interest rate on all of its debt is 12%. Portogee Inc pays out 40% of its net income as dividends and has a tax rate of 40%. How much additional external capital (AFN) will be required? (Hints: Base the forecasted interest expense on the amount of debt at the beginning of the year, because any new debt is added at the end of the year.) c. Forecast the 2022 free cash flow and the 2022 dividend per share (Note: present your calculations). d. Assume that it is now January 1,2022 , the forecasted FCF for 2022 is $3,700 thousand, and this FCF is expected to grow at 25% for 2023 and 20% for 2024 , afterward FCFs are expected to grow at a constant rate of 6% indefinitely. The company's WACC is 12%, and stockholders require a return of 14% on Portogee's stock. Calculate the firm value and the stock price today using the corporate value model. e. Assume that it is now January 1,2022 , the forecasted 2022 dividend per share (DPS) is $0.95, and this DPS is expected to grow at 15% for 2023 and 10% for 2024 , afterward dividends are expected to grow at a constant rate of 6% indefinitely. The company's WACC is 12.0%, and stockholders require a return of 14% on Portogee's stock. Calculate the stock price today using the dividend discount model. THE END Question 1: (2.0 marks) What are some of the characteristics of a firm with a long eash conversion cycle? What are some pros and cons of holding high levels of current assets in relation to sales? Question 2 (8.0 marks) Portogee Inc's 2021 financial statements are shown below. Portogee Inc: balance sheet as of December 31, 2021 (Thousands of Dollars) forecasted Portogee Inc: Income statement for December 31, 2021 (Thousands of Dollars)

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