Forecasted levels of the line of credit and special dividend

Assignment Help Financial Management

Reference no: EM131982956

Start with the partial model in the file Ch12 P10 Build a Model.xlsx on the textbook’s Web site, which contains the 2016 financial statements of Zieber Corporation. Forecast Zeiber's 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) Zeiber 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. (6) 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.

Question:

1. What are the forecasted levels of the line of credit and special dividends?

2. Now assume that the growth in sales is only 3% (do this by changing the growth rate in Cell G51). What are the forecasted levels of line of credit and special dividends?

Reference no: EM131982956

Questions Cloud

How modern cost management accounting could be applied : Describe how modern cost management accounting could be applied to a current attempt to recreate this structure - Design your spreadsheet to meet the assignment

Engineering management and management in general : How would you distinguish between engineering management and management in general?

Implementation of the npr and pma : Has the implementation of the NPR and PMA made an impact on productivity and customer service standards in the public sector?

Represents the opportunity cost of the remodel project : Which one of the following represents the opportunity cost of the remodel project?

Forecasted levels of the line of credit and special dividend : What are the forecasted levels of the line of credit and special dividends?

Few levels of management : Which classical management ideas do or do not have value in such settings? Please provide examples.

Millennial generation to best manage them in workplace : With this in mind, what should Baby-Boomers know about members of the Millennial generation to best manage them in the workplace?

What role can hr play in mitigating these effects : What effect do these changes have on employees? What role can HR play in mitigating these effects?

Developing the strategic knowledge base in your organization : Critically discuss the above statement in relation to effectively developing the strategic knowledge base in YOUR organization.

User Account

All Pages