Consider the spreadsheet below.

A.What would you need to type into cell C32 and drag across to cell G32 to complete the spreadsheet if you were to assume that debt acts as the plug in this model? (2 marks)

B.Once interest is added, what will happen to the size of dividends and retained earnings? (2 marks)

C.In this sales driven pro forma, would the free cash flows always be higher when the growth rate increases? Will this change over a longer time period? (4 marks)

Sales growth 0.05 2 Initial Sales 1500 3 FA Sales 0.75 4 CA Sales 0.12 5 CL Sales 0.08 6 COGS_Sales 0.8 7 Interest 0.07 8 Dividend Payout 0.6 9 Tax Rate 0.3 10 11 12 year 0 1 2 3 13 14 Profit and Loss 15 Sales 1500 1575 1654 1736 16 Cost of Sales 1823 1914 1260 1323 1389 1459 17 Interest 1532 0 0 18 Profit before Tax 0 0 315 331 347 365 19 Taxes 383 95 99 104 109 20 Profits after Tax 115 221 232 21 Dividend 243 255 268 132 139 22 Retained Earnings 146 153 161 88 93 97 102 23 107 24 25 26 Balance Sheet 27 Current Assets 150 189 198 208 28 Fixed Assets 219 230 700 1181 1240 1302 1367 29 Total Assets 1436 850 1370 1439 1511 1586 1666 30 31 Current Liabilities 70 126 132 139 32 Debt 146 153 280 33 Equity 34 Stock 400 400 400 400 400 35 400 Accumulated Retained 100 188 281 6 Total Liabilities 378 480 587 850 714 813 917 1026 1141