fm14 15 - the year. Answer: See the completed worksheet....

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Mini Case: 14 - 15 f. Now estimate the 2008 financial requirements using the percent of sales approach. Assume (1) that each type of asset, as well as payables, accruals, and fixed and variable costs, will be the same percent of sales in 2008 as in 2007; (2) that the payout ratio is held constant at 40 percent; (3) that external funds needed are financed 50 percent by notes payable and 50 percent by long-term debt (no new common stock will be issued); (4) that all debt carries an interest rate of 10 percent; and (5) interest expenses should be based on the balance of debt at the beginning of
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Unformatted text preview: the year. Answer: See the completed worksheet. The problem is not difficult to do by hand, but we used a spreadsheet model for the flexibility such a model provides. Income Statement (In Millions Of Dollars) Actual Forecast 2007 Forecast Basis 2008 Sales $ 2,000.0 Growth 1.25 $ 2,500.0 COGS $ 1,200.0 % Of Sales 60.00% $ 1,500.0 SGA Expenses $ 700.0 % Of Sales 35.00% $ 875.0 EBIT $ 100.0 $ 125.0 Less Interest $ 10.0 Interest Rate X Debt 07 $ 20.0 EBT $ 90.0 $ 105.0 Taxes (40%) $ 36.0 $ 42.0 Net Income $ 54.0 $ 63.0 Dividends $ 21.6 $ 25.2 Add. To Retained Earnings $ 32.4 $ 37.8...
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This note was uploaded on 07/13/2011 for the course FIN 4414 taught by Professor Staff during the Spring '08 term at University of Florida.

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