Use the following information on Company Y and perform pro-forma financial modeling using a planned expansion method to answers the next two questions. To do this assume that the percentage values with respect to sales of the (i) costs except depreciation, (ii) cash and equivalents, (iii) accounts receivable, (iv) inventories, and (v) accounts payable will stay fixed at the values corresponding for 2022.

Assume also that income tax will remain at 35% of the Pretax Income.

Consider Company Y. This firm sells a product for which in 2022 the total market size was of 2000000 units, of which Company Y owned a share of 40%.

Both, the total market size and Company Ys market share are expected to grow at a 3% yearly rate for the next five years.

The price of the product is $100 in 2022 and is expected to remain at that price for the next years.

Market Analysis	2022	2023	2024	2025
Market Size	2,000,000	2,060,000	2,121,800	2,185,454
Market Share	40%	41%	42%	44%
Production Volume	800,000
Sales Price:	$ 100.00
Sales

In 2022, the outstanding debt of Company Y is $500000, for which the company makes yearly interest payments of 10%. The executives of Company Y are considering making a significant capital investment in 2023 of $4000000 to purchase new machinery. The company plans to finance this investment with a 30-year loan that makes yearly interest payments equivalent to 7% of its principal. The principal is paid when the loan matures.

The following table summarizes the debt and interest payment of Company Y.

Debt and Interest Table		2022	2023	2024
Outstanding Debt		500,000	500,000	4,500,000
New Net Borrowing			4,000,000
Interest on Debt

Currently, Company Y makes yearly expenditures on replacement capital investment of $150000. If the company makes the planned expansion it is decided the company will perform yearly expenditures on replacement capital investment of $525000. The current and the planned expenditures on replacement of capital investment will be financed by the companys cash flow.

The following table indicates for 2022 Company Ys values of i. opening book value, ii. capital investment, iii. depreciation, and iv. closing book value. The Table also indicates the 2023-2024 forecast values of capital depreciation if the planned expansion were to occur in 2023.

Fixed Assets & Capital Investment	2022	2023	2024
Opening Book Value	1,500,000
Capital Investment	150,000
Depreciation	-132,000	-453,440	-459,165
Closing Book Value	1,518,000

The following table contains Company Ys income statement for 2022.

Income Statement:	2022	2023
Sales	80,000,000
Costs except Depr.	-8,000,000
EBITDA	72,000,000
Depreciation	-132,000
EBIT	71,868,000
Interest Expense (net)	-50,000
Pretax Income	71,818,000
Income Tax	-25,136,300
Net Income	46,681,700

The following table contains Company Ys balance sheet for 2022.

Balance Sheet	2022	2023
Assets
Cash and Equivalents	36,000,000
Accounts Receivable	28,000,000
Inventories	36,000,000
Total Current Assets	100,000,000
Property Plant and Equipment	1,518,000
Total Assets	101,518,000
Liabilities and Equity
Accounts Payable	28,000,000
Total Current Liabilities	28,000,000
Debt	500,000
Total Liabilities	28,500,000
Stockholders' Equity
Starting Stockholders' Equity	3,000,000
Net Income	46,681,700
Dividends	23,336,300
Stockholders' Equity	73,018,000
Total Liabilities & Equity	101,518,000

"Question: Before making any adjustments to balance Total Assets with Total Liabilities and Equity, what is Company Y s forecast value of Total Liabilities and Equity for 2023?"

10 points

QUESTION 4

Question: How much are the net new financing for Company Y s on 2023?