W-6 nr 5

Assuming that? Ideko's market share after 2005 will increase each? year, the required production volume for the following five years are shown? here:

Sales Data	Growth/Year	2005	2006	2007	2008	2009	2010
Market Size (000 units)	5.20%	10,000.0	10,520.0	11,067.0	11,642.5	12,247.9	12,884.8
Market Share	0.45%	10.30%	10.75%	11.20%	11.65%	12.10%	12.55%
Production Volume (000 units)		1,030.0	1,130.9	1,239.5	1,356.4	1,482.0	1,617.0

Ideko's production plant will require an expansion in 2010 (when production volume will exceed the current level by 50%?), and the cost of this expansion will be $14.2 million. Assuming the financing of the expansion will be delayed? accordingly, calculate the projected interest payments and the amount of the projected interest tax shields? (assuming that the interest rates on the term loans is 6.7%?) through 2010. Consider an income tax rate of 35%.

?Ideko's balance sheet for 2005 is shown here

Estimated 2005 Balance Sheet Data for Ideko Corporation
Balance Sheet ($ 000)
Assets
Cash and Equivalents	6164
Accounts Receivable	18493
Inventories	6165
Total Current Assets	30822
Property, Plant, and Equipment	49500
Goodwill	72332
Total Assets	152654
Liabilities and Stockholders' Equity
Accounts Payable	4654
Debt	113100
Total Liabilities	117754
Stockholders' Equity	34900
Total Liabilities and Equity	152654

(Round to the nearest? $ 000.)

Debt and Interest ($ 000)	2005
Outstanding Debt
Interest on Term Loan 6.7%
Interest Tax Shield