There are two firms, A and B$.$ Each firm has bonds outstanding with a par value of $$20,000$ and $4$ years to maturity as of the end of FY$\text{'}14.$ Firm A$\text{'}$s bonds pay annual coupons of $10\%.$ Firm B$\text{'}$s bonds pay annual coupons of $5\%.$ Assume:

$-$ For the year $2015$ all sales, inventory purchases from suppliers, operating expenses and taxes are made in cash.

$-$ All the net income is paid out as dividends for each firm.

The tax rate is $30\%.$

Complete the FY$15$ income statement, the FY $15$ direct statement of cash flows and the EOY'$15$ balance sheet below for each firm. Note that you'll have to compute the YTM on the bonds for each company in order to find the interest expense. Similar to what we did in class, prepare the first year of the amortization table, and use it to find what goes in interest expense $($income statement$)$ and the ending carrying value of the bonds $($balance sheet value as at EOY' $15).$ Note that the bonds payable on the balance sheet at EOY'$14$ would be the beginning carrying value $($present value when calculating YTM$).$

FIRM A

EOY'$14$

Cash $=6,325$

Accounts Receivable $=5,000$

Inventory $=15,000$

$-$ Current Assets $=26,325$

Net PPE $=50,000$

Total Assets $=76,325$

Accounts Payable $=5,000$

Bonds Payable $=21,325$

Equity $=50,000$

Total LIab. & Equity $=76,325$

EOY'$15$

Cash $=?$

Accounts Receivable $=5,000$

Inventory $=15,000$

Current Assets $=?$

Net PPE $=45,000$

Total Assets $=?$

Accounts Payable $=5,000$

Bonds Payable $=?$

Equity $=50,000$

Total LIab. & Equity $=?$

FY$15$

Sales $=100,000$

COGS $=70,000$

Gross Profit $=30,000$

Operating Expenses $=10,000$

Depreciation $=5,000$

EBIT $=15,000$

Interest Expense $=?$

EBT $=?$

Taxes $=?$

Net Income $=?$

Dividends $=?$

Cash collected from sales $=?$

Cash paid for inventory purchase $=?$

Cash paid for operating expenses $=?$

Cash paid for interest $=?$

Cash Flow from Operating Act. $=?$

Issuance of Long$-$Term Debt $=0$

Dividends Paid $=?$

Cash Flow from Financing Act. $=?$

Cash Flow from Investing Act. $=0$

Net Change in Cash $=?$

FIRM B

EOY'$14$

Cash $=6,325$

Accounts Receivable $=5,000$

Inventory $=15,000$

Current Assets $=26,325$

Net PPE $=50,000$

Total Assets $=76,325$

Accounts Payable $=8,312$

Bonds Payable $=18,013$

Equity $=50,000$

Total LIab. & Equity $=76,325$

EOY'$15$

Cash $=?$

Accounts Receivable $=5,000$

Inventory $=15,000$

Current Assets $=?$

Net PPE $=45,000$

Total Assets $=?$

Accounts Payable $=8,312$

Bonds Payable $=?$

Equity $=50,000$

Total LIab. & Equity $=?$

FY$15$

Sales $=100,000$

COGS $=70,000$

Gross Profit $=30,000$

Operating Expenses $=10,000$

Depreciation $=5,000$

EBIT $=15,000$

Interest Expense $=?$

EBT $=?$

Taxes $=?$

Net Income $=?$

Dividends $=?$

Cash collected from sales $=?$

Cash paid for inventory purchase $=?$

Cash paid for operating expenses $=?$

Cash paid for interest $=?$

Cash Flow from Operating Act. $=?$

Issuance of Long$-$Term Debt $=0$

Dividends Paid $=?$

Cash Flow from Financing Act. $=?$

Cash Flow from Investing Act. $=0$

Net Change in Cash $=?$