130,000 31 You are responsible for developing a model that analyzes the potential investment, providing valuations of alternate strategies and a sensitivity analysis of the results. 32 The following model should include only the incremental impact on the Income Statement, Balance Sheet and Cash Flow Statement. 33 Please enter formula in the yellow boxes below to develop the model. 34 25 35 2021 2022 2023 2024 2025 2026 Hints 20 36 Income Statement 37 Finished Goods Expense 400,000 400,000 400,000 400,000 400,000 Shown as positive because it is an expense that will cease to exist 38 Depreciation (60,000) (60,000) (60,000) ( (60,000) (60,000) 39 Labor (200,000) (200,000) (200,000) (200,000) (200,000) A 40 Overhead (10,000) ( (10,000) (10,000) (10,000) (10,000) 4 41 EBIT 130,000 130,000 130,000 130,000 40 42 Interest Income (5% interest rate) 4 Interest Income is based on a 5% interest rate applied to prior year Net Cash (Cash minus Debt) 43 Dest Pretax 130,000 130,000 130,000 130,000 130,000 A .. 44 Tax (30%tax rate) 39,000 39,000 39,000 39,000 39,000 45 Net Income 91,000 91,000 91,000 91,000 91,000 46 47 Balance Sheet (change in account) 48 Cash (150,000 Cash is equal to that of the previous year plus Cash Generated 49 PP&E &E 300,000 PP&E is equal to that of the previous year plus CapEx. (However, CapEx is shown as a negative on the Cash Flow Statement so remember to change the sign to make it a positive.) 50 Debt 150,000 Debt is equal to that of the previous year plus Issues (Retirement) of Debt 51 Equity Equity is equal to that of the previous year plus Net Income (there are no Dividends) 52 53 Cash Flow Statement 54 EA Net Income 55 Net Income from the Income Statement 55 Depreciation 56 Investment Required spread of the useful life (5 years) 56 Cash Flow from Operations 57 57 Capex (300,000) 0 0 0 0 58 Cash Flow from Investing (300,000) 59 Issues (Retirement) Debt 150,000 Debt based on Percent Debt Financed with 1/5th retired each year. Must be a formula based on D50 enabling changed assumptions of percent debt financed. 60 Cash Flow from Financing 150,000 61 Cash Generated (150,000) 62 63 Write a fomula that calculates the Net Present Value (NPV) of the cash flows in Row 61 using a 10% discount factor. 04 64 65 OD 66 Change the 'Investment Required', cell D27, to $200,000 and enter the resulting NPV value (not the formula) in the yellow box below. 67 07 68 69 Keeping the $200,000 'Investment Required' change the 'Percent Debt Financed' to 0% and enter the resulting NPV value (not the formula) in the yellow box below. 70 71 130,000 31 You are responsible for developing a model that analyzes the potential investment, providing valuations of alternate strategies and a sensitivity analysis of the results. 32 The following model should include only the incremental impact on the Income Statement, Balance Sheet and Cash Flow Statement. 33 Please enter formula in the yellow boxes below to develop the model. 34 25 35 2021 2022 2023 2024 2025 2026 Hints 20 36 Income Statement 37 Finished Goods Expense 400,000 400,000 400,000 400,000 400,000 Shown as positive because it is an expense that will cease to exist 38 Depreciation (60,000) (60,000) (60,000) ( (60,000) (60,000) 39 Labor (200,000) (200,000) (200,000) (200,000) (200,000) A 40 Overhead (10,000) ( (10,000) (10,000) (10,000) (10,000) 4 41 EBIT 130,000 130,000 130,000 130,000 40 42 Interest Income (5% interest rate) 4 Interest Income is based on a 5% interest rate applied to prior year Net Cash (Cash minus Debt) 43 Dest Pretax 130,000 130,000 130,000 130,000 130,000 A .. 44 Tax (30%tax rate) 39,000 39,000 39,000 39,000 39,000 45 Net Income 91,000 91,000 91,000 91,000 91,000 46 47 Balance Sheet (change in account) 48 Cash (150,000 Cash is equal to that of the previous year plus Cash Generated 49 PP&E &E 300,000 PP&E is equal to that of the previous year plus CapEx. (However, CapEx is shown as a negative on the Cash Flow Statement so remember to change the sign to make it a positive.) 50 Debt 150,000 Debt is equal to that of the previous year plus Issues (Retirement) of Debt 51 Equity Equity is equal to that of the previous year plus Net Income (there are no Dividends) 52 53 Cash Flow Statement 54 EA Net Income 55 Net Income from the Income Statement 55 Depreciation 56 Investment Required spread of the useful life (5 years) 56 Cash Flow from Operations 57 57 Capex (300,000) 0 0 0 0 58 Cash Flow from Investing (300,000) 59 Issues (Retirement) Debt 150,000 Debt based on Percent Debt Financed with 1/5th retired each year. Must be a formula based on D50 enabling changed assumptions of percent debt financed. 60 Cash Flow from Financing 150,000 61 Cash Generated (150,000) 62 63 Write a fomula that calculates the Net Present Value (NPV) of the cash flows in Row 61 using a 10% discount factor. 04 64 65 OD 66 Change the 'Investment Required', cell D27, to $200,000 and enter the resulting NPV value (not the formula) in the yellow box below. 67 07 68 69 Keeping the $200,000 'Investment Required' change the 'Percent Debt Financed' to 0% and enter the resulting NPV value (not the formula) in the yellow box below. 70 71