Solution to FM12 Ch 14 P10 Build a Model

# Solution to FM12 Ch 14 P10 Build a Model - Chapter14...

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Chapter14. Solution for Ch 14-10 Build a Model Here are the company's historical sales. Hint: Use the Trend function to forecast sales for 2008. Year Sales Growth Rate 2002 129,215,000 2003 180,901,000 40.0% 2004 235,252,000 30.0% 2005 294,065,000 25.0% 2006 396,692,000 34.9% 2007 455,150,000 14.7% 2008 515,465,267 % Increase in Predicted Sales for 2008 over 2007: 2007 Sales 455,150,000 2008 Sales 515,465,267 % increase 13.25% Note: This growth rate has been declining over time. Key Input Data: Used in the forecast Tax rate 40% Dividend growth rate 8% 9% 11% December 31 Income Statements: (in thousands of dollars) Forecasting 2007 2008 2008 2007 basis Ratios Inputs Forecast Sales \$455,150 Growth 20.00% \$546,180 \$386,878 % of sales 85.00% 85.00% \$464,253 Cumberland Industries' financial planners must forecast the company's financial results for the coming year. The forecast for many items will be based on sales, and any additional funds needed will be obtained as notes payable. a. Assuming the historical trend continues, what will sales be in 2008? Base your forecast on a spreadsheet regression analysis of the 2002-2007 sales data above, and include the summary output of the regression in your answer. By what percentage are sales predicted to increase in 2008 over 2007? Is the sales growth rate increasing or decreasing?

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Solution to FM12 Ch 14 P10 Build a Model - Chapter14...

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