Project #89375 - Pro Forma Income Statement

#1  Construct a pro forma income statement for the first year and second year for the following assumptions: 

Units of Sales in Year 1: 100,000

  • Price per Unit: $10
  • Variable cost per unit: 30%
  • Fixed Costs: $120,000
  • Income taxes: 15%
  • Interest Expense: $200,000
  • In year 2, Price per unit increases to $11.50, and unit of sales increases by 3%, all other assumptions remain the same.

# 2.  Calculate the sustainable growth based on the following information: 

• Earnings after taxes = $35,000
• Equity = $100,000
• d=22.4%

 

# 3.  Calculate a table of interest rates for 5 years based on the following information:

  • The pure interest rate is 1.6%
  • Inflation expectations for year 1 = 3%, year 2 =3.5%, years 3-5 =5%
  • The default risk is .1% for year one and increases by .2% over each year
  • Maturity risk is 0 for years 1 and 2 and .2% for years 3-5

Subject Business
Due By (Pacific Time) 10/27/2015 08:00 pm
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