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With the partial model please forecast Ziebers 2017 income statement and balance sheets. Use the following assumptions: (1) Sales grow by 6%. (2) The ratios of expenses to sales, depreciation to fixed assets, cash to sales, accounts receivable to sales, and inventories to sales will be the same in 2017 as in 2016. (3) Zieber will not issue any new stock or new long-term bonds. (4) The interest rate is 11% for long- term debt and the interest expense on long-term debt is based on the average balance during the year. (5) No interest is earned on cash. (6) Regular dividends grow at an 8% rate. Calculate the additional funds needed (AFN). If new financing is required, assume it will be raised by drawing on a line of credit with an interest rate of 12%. Assume that any draw on the line of credit will be made on the last day of the year, so there will be no additional interest expense for the new line of credit. If surplus funds are available, pay a special dividend.

What are the forecasted levels of the line of credit and special dividends? (Hints: Create a column showing the ratios for the current year; then create a new column showing the ratios used in the forecast. Also, create a preliminary forecast thatdoesnt include any new line of credit or special dividends. Identify the financing deficit or surplus in this preliminary forecast and then add a new column that shows the final forecast that includes any new line of credit or special dividend.)

Now assume that the growth in sales is only 3%. What are the forecasted levels of the line of credit and special dividends?

3 Start with the partial model in the file Ch12 P10 Build a Model.xis x on the textbook's Web site, which contains 4 the 2016 financial statements of Zieber Corporation. Forecast Zeiber's 2017 income statement and balance 5 sheets. Use the following assumptions: (1) Sales grow by 6%. (2) The ratios of expenses to sales, 6 depreciation to fixed assets, cash to sales, accounts receivable to sales, and inventories to sales will be the same in 2017 as in 2016. (3) Zeiber will not issue any new stock or new long-term bonds. (4) The interest 8 rate is 11% for long-term debt and the interest expense on long-term debt is based on the average balance 9 during the year. (5) No interest is earned on cash. (6) Regular dividends grow at an 8% rate. (6) Calculate the 0 additional funds needed (AFN). If new financing is required, assume it will be raised by drawing on a line of 11 credit with an interest rate of 12%. Assume that any draw on the line of credit will be made on the last day of 12 the year, so there will be no additional interest expense for the new line of credit. If surplus funds are 14 Key Input Data Used in the forecast 16 Tax rate Dividend growth rate 18 Rate on notes payable-term debt, rstd 19 Rate on long-term debt, rd 20 Rate on line of credit, rioc 40% 8% 9% 11% 12% 22 a. What are the forecasted levels of the line of credit and special dividends? (Hints: Create a column 23 showing the ratios for the current year; then create a new column showing the ratios used in the forecast 24 Also, create a preliminary forecast that doesn't include any new line of credit or special dividends. Identify 25 the financing deficit or surplus in this preliminary forecast and then add a new column that shows the final 26 forecast that includes any new line of credit or special dividend.) 27 28 Begin by calculating the appropriate historical ratios in Column E. Then put these ratios and any other input 29 ratios in Column G 31 Forecast the preliminary balance sheets and income statements in Column H. Don't include any line of credit 32 or special dividend in the preliminary forecast 34 Atter completing the preliminary forecast of the balance sheets and income statement, go to the area below the preliminary forecast and identify the financing deficit or surplus. Then use Excel's IF statements to specity the amount of any new line of credit OR special dividend (you should not have a new line of credit 37 AND a special dividend, only one or the other) 38 39 After specifying the amounts of the special dividend or line ot credit, ereate a second column (U) for the final 40 forecast next to the column for the preliminary forecast (H). In this final forecast, be sure to include the 41 etfect of the special dividend or line of credit 42 43