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Use the following information on Company Y and perform pro-forma financial modeling using a planned expansion method to answers question (3) and (4). To do

Use the following information on Company Y and perform pro-forma financial modeling using a planned expansion method to answers question (3) and (4). 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 2016.

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

Consider Company Y. This firm sells a product for which in 2016 the total market size was of 999000 units, of which Company Y owned a share of 25%.

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 $114 in 2016 and is expected to remain at that price for the next years.

Market Analysis

2016

2017

2018

2019

Market Size

999,000

1,028,970

1,059,839

1,091,634

Market Share

25%

26%

27%

27%

Production Volume

249,750

Sales Price:

$114.00

Sales

In 2016, the outstanding debt of Company Y is $700000, for which the company makes yearly interest payments of 10%. The executives of Company Y are considering making a significant capital investment in 2017 of $1900000 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

2016

2017

2018

Outstanding Debt

700,000

700,000

2,600,000

New Net Borrowing

1,900,000

Interest on Debt

Currently, Company Y makes yearly expenditures on replacement capital investment of $50000. If the company makes the planned expansion it is decided the company will perform yearly expenditures on replacement capital investment of $225000. The current and the planned expenditures on replacement of capital investment will be financed by the companys cash flow.

The following table indicates for 2016 Company Ys values of i. opening book value, ii. capital investment, iii. depreciation, and iv. closing book value. The Table also indicates the 2017-2018 forecast values of capital depreciation if the planned expansion were to occur in 2017.

Fixed Assets & Capital Investment

2016

2017

2018

Opening Book Value

500,000

Capital Investment

50,000

Depreciation

-44,000

-196,480

-198,762

Closing Book Value

506,000

The following table contains Company Ys income statement.

Income Statement:

2016

2017

Sales

28,471,500

Costs except Depr.

-2,277,720

EBITDA

26,193,780

Depreciation

-44,000

EBIT

26,149,780

Interest Expense (net)

-70,000

Pretax Income

26,079,780

Income Tax

-9,127,923

Net Income

16,951,857

The following table contains Company Ys balance sheet.

Balance Sheet

2016

2017

Assets

Cash and Equivalents

8,541,450

Accounts Receivable

8,541,450

Inventories

2,847,150

Total Current Assets

19,930,050

Property Plant and Equipment

506,000

Total Assets

20,436,050

Liabilities and Equity

Accounts Payable

9,965,025

Total Current Liabilities

9,965,025

Debt

700,000

Total Liabilities

10,665,025

Stockholders' Equity

Starting Stockholders' Equity

8,000,000

Net Income

16,951,857

Dividends

-15,180,832

Stockholders' Equity

9,771,025

Total Liabilities & Equity

20,436,050

Question 1) Before making any adjustments to balance Total Assets with Total Liabilities and Equity, what is Company Ys forecast value of Total Liabilities and Equity for 2017?

QUESTION 2) How much are the net new financing for Company Ys on 2016?

Please only answer if you can do it correctly. if copy the question to word and solve it there and post it back would be appreciated.

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