A B D E F G H 1 J Sales growth Current assets/Sales Current liabilities/Sales Net fixed assets/Sales Costs of goods sold/Sales Depreciation rate Interest earned on cash balances Tax rate Balance Sheet and P&L statement 10% 20% 15% 320% 50% 5% 5% 40% This sheet presents ABC Inc.'s base year (year 0) balance sheet, income statement and assumptions on financial rations/items. a) Use the data to project the financial statements for year 1. b) Extend the model to 5 years and calculate free cash flows for each year. 0 Year Income statement Sales Costs of goods sold Depreciation Interest earned on cash Profit before tax Taxes Profit after tax Retained earnings 50,000 (25,000) (20,000) 7,000 12,000 (4,800) 7,200 7,200 140,000 10,000 Balance sheet Cash Current assets Fixed assets At cost Depreciation Net fixed assets Total assets 400,000 (240,000) 160,000 310,000 20,000 Current liabilities Debt Stock Accumulated retained earnings Total liabilities and equity 275,000 15,000 310,000