a. Forecasting Pro Forma Financial Statements Prepare a pro forma income statement and balance sheet for Webb Enterprises, where revenues are expected to grow by 20% in 2016. Make the following assumptions in making your forecast of the firm’s balance sheet for 2016:

The income statement expenses are a constant percentage of revenues except for interest, which remains equal in dollar amount to the 2015 level, and taxes, which equal 40% of earnings before taxes.

The cash and marketable securities balance remains equal to $500, and the remaining current asset accounts increase in proportion to revenues for 2015.

Net property, plant, and equipment increase in proportion to the increase in revenues and depreciation expenses for 2016 is $2,000.

Accounts payable increases in proportion to firm revenues.

Owners’ equity increases by the amount of firm net income for 2011 (no cash dividends are paid).

Long-term debt remains unchanged, and short-term debt changes in an amount that balances the balance sheet

b. Forecasting Firm FCF Using your pro forma financial statements from above problem, estimate the firm’s FCF for 2016

Medical insurance : You have medical insurance for your family with a $250 deductible, 20% coinsurance, and $1,500 OOP maximum for each individual and $3,000 family OOP maximum. Calculate your OOP costs if three people in your family each incur $6,000 in medical costs. |

What is the amount of the lease-equivalent loan : Riverton Mining plans to purchase or lease $435,000 worth of excavation equipment. If purchased, the equipment will be depreciated on a straight-line basis over five years, after which it will be worthless. If Riverton purchases the equipment, what i.. |

Risk-free monthly lease rate : Suppose an H1200 supercomputer has a cost of $500,000 and will have a residual market value of $100,000 in 5 years. The risk-free interest rate is 6.1% APR with monthly compounding. What is the risk-free monthly lease rate for a 5-year lease in a per.. |

CPU chips with lower power consumption and heat generation : Consider two mutually exclusive R&D projects that ADM is considering. Assume the discount rate for ADM is 13 percent. Project A: Server CPU .13 micron processing project By shrinking the die size to .13 micron, ADM will be able to offer server CPU ch.. |

Forecasting pro forma financial statements : Forecasting Pro Forma Financial Statements Prepare a pro forma income statement and balance sheet for Webb Enterprises, where revenues are expected to grow by 20% in 2016. Make the following assumptions in making your forecast of the firm’s balance s.. |

What is the future value of the cash flow stream : At a rate of 8%, what is the future value (at the end of year 4) of the following cash flow stream: $0 at time 0; $92 at the end of year 1; $91 at the end of year 2; and $52 at the end of year 4? Enter your answer with 2 decimal places of precision. .. |

What is the bonds yield to maturity and yield to call : General Electric has just issued a callable (at par) ten-year 8% coupon bond with annual coupon payments. The bond can be called at par in one year or anytime thereafter on a coupon payment date. It has a price of $104 and a face value of $104. What .. |

Offer to compensate her for the loss in tax benefit : Suppose that a worker received $56,000 in wage at a job that also provides health insurance. A health insurance policy costs $7,000. The employee is considering moving to a job without health insurance at which she would have to purchase health insur.. |

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## Calculate the cost of preferred equityThe Imaginary Products Co. currently has debt with a market value of $300 million outstanding. The debt consists of 9 percent coupon bonds (semiannual coupon payments) which have a maturity of 15 years and are currently priced at $839.36 per bond. Ca.. |

## Estimate the incremental operating cash flows attributableWilber Corporation is considering replacing a machine. The replacement will cut operating expenses by $24,000 per year for each of the 5 years the machine is expected to last. Although the old machine has a zero book value, it has a remaining useful .. |

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