Assume a company is formed with 100 of equity capital all

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Assume a company is formed with $100 of equity capital, all of which is immediately invested in working capital. Assumptions are as follows:

Dividends

Nondividend-Paying

First-year sales

$100

Sales growth

10% per year

Cost of goods sold/Sales

20%

Operating expense/Sales

70%

Interest income rate

5%

Tax rate

30%

Working capital as percent of sales

90%

Based on this information, forecast the company's net income and cash flow for five years.

Reference no: EM13569278

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