CASE ANALYSIS The following comprehensive assessment is based on a continuing case study of Virtuoso Corporation. The following financial statements have been provided: Virtuoso Corporation Income Statement For the year ended June 30, 2021 Sales Cost of Goods Sold Gross Profit Selling & Marketing Costs Admin. Expenses Depreciation Expense Earnings before Interest & Taxes Interest Expense Taxable Income Taxation (30%) Net Income 2021 ('000s) 10,700 (4,320) 6,380 (380) (1,050) (250) 4,700 (120) 4,580 (1,374) 3.206 Dividends (35%) Addition to Retained Earnings 1,122 2,084 Virtuoso Corporation Statement of Financial Position As at June 30, 2020 & 2021 + 2020 ('000s) 2021 ('000s) 2020 ('000s) 2021 ('000s) ASSETS Current Assets Inventories Accounts Receivables Cash & Equivalents LIABILITIES & EQUITY Current Liabilities Accounts Payables Notes Payables 3,200 2,000 3,500 8,700 2,800 2,200 4.525 9,525 2,500 2.300 4,800 1,750 2,500 4,250 Non-current Liabilites 3,000 2.900 Non Current Assets, Net 5.300 6.009 Total Liabilities 7,800 7,150 Equity Common Stock Retained Earnings Total Equity 1,500 4,700 6,200 1,600 6,784 8,384 TOTAL ASSETS 14.000 15,534 TOTAL LIAB. & EQUITY_ 14.000 15.534 Question 5 25 Marks PART A 15 Marks The CEO has advised the Finance Manager that in addition to the two (2) projects evaluated in question 4, the company would like to invest in a possible third project over the upcoming year. However, to do this, the company will have to borrow a 3-year $500,000 loan at an interest rate of 6% per annum to fund the project. Required: (a) Calculate the monthly repayment on this intended loan. (4 Marks) (b) Prepare the company's Amortization Schedule for the first three (3) months of this loan, clearly showing the interest and principal payments. (6 Marks) (c) The Finance Manager is also considering utilizing the proceeds of a short-term investment that is due to mature in October 2021 (instead of the borrowing the full amount of the loan). If Virtuoso Corporation was investing $3,750 monthly into an account over 5 years at a rate of 9%. compounded monthly, compute the value of this investment at the end of 5 years. (5 Marks) PART B 10 Marks A company's Return on Equity (ROE) is affected by three things: operating efficiency, asset use efficiency and financial leverage. The decomposition of ROE via the Du Pont Identity approach is a convenient way of systematically approaching financial statement analysis. If ROE is unsatisfactory by some measure, then the Du Pont identity tells you where to start looking. Required: Calculate Virtuoso Corporation's Return on Equity Using the Du Pont Identity for the year ended June 30, 2021. (10 Marks)