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Start with the partial model in the le Ch12 P10 Build a Modei.xlsx on the textbook's Web site, which contains the 2016 'nancial statements of Zieber Corporation. Forecast Zeiber's 2017 income statement and balance sheets. Use the following assumptions: (1) Sales grow by 6%. (2) The ratios of expenses to sales, depreciation to xed assets, cash to sales, accounts receivable to sales, and inventories to sales will be the same in 2017 as in 2016. (3) Zeiber will not issue any new stock or new long-term bonds. (4) The interest rate is 11% for long-term debt and the interest expense on long- term debt is based on the average balance during the year. (5) No interest is earned on cash. (6) Regular dividends grow at an 8% rate. (6) Calculate the additional funds needed (AFN). If new nancing is required, assume it will be raised by drawing on a line of credit with an interest rate of 12%. Assume that any draw on the line of credit will be made on the _last day of the year, so there will be no additional interest expense for the new line of credit. If surplus funds are _available. Dav a special dividend. Key Input Data: Used in the _ forecast _ Tax rate 40% :Dividend growth rate 8% Rate on notes payable-term debt, rm 9% Rate on long-term debt, rd 11% Rate on line of credit, rm; 12% a. What are the forecasted levels of the line of credit and special dividends? (Hints: Create a column showing the ratios _for the current year; then create a new column showing the ratios used in the forecast. Also, create a preliminary forecast that doesn't include any new line of credit or special dividends. Identify the nancing decit or surplus in this preliminary forecast and then add a new column that shows the nal forecast that includes any new line of credit or special dividend.) Begin by calculating the appropriate historical ratios in Column E. Then put these ratios and any other input ratios in Column G. Forecast the preliminary balance sheets and income statements in Column H. Don't include any line of credit or special dividend in the preliminary forecast. _After completing the preliminary forecast of the balance sheets and income statement, go to the area below the preliminary forecast and identify the nancing decit or surplus. Then use Excel's |F statements to specify the amount of any new line of credit 0R special dividend (you should not have a new line of credit AND a special dividend, only one or the other). After specifying the amounts of the special dividend or line of credit, create a second column (I) for the nal forecast next to the column for the preliminary forecast (H). In this nal forecast, be sure to include the effect of the special dividend or line of credit. Income Statements: 2017 Preliminary (December 31, in thousands of dollars) 2016 forecast (doesn't 2017 Final forecast Historical 2017 Input include special (includes special 2016 ratios Forecasting basis ratios dividend or LOC) ' dividend or LOC) Sales $455,150 Growth Expenses (excluding depr. & amort.) $386,878 "A of sales Depreciation and Amortization $14,565 % of xed assets ' EBIT $53,708 Interest expense on long-term debt $11,880 Interest rate x average debt during year Interest expense on line of credit $0 EBT $41,828 Taxes (40%) $16,731 Net Income $25,097 V Common dividends (regular dividends) $12,554 Growth ' Special dividends Zero in preliminary forecast Addition to retained earnings $12,543 ' Balance Sheets 2017 Preliminary (December 31, in thousands of dollars) 2016 forecast (doesn't 2017 Final forecast Historical 2017 Input include special (includes special 2016 ratios Forecasting basis ratios dividend or LOC) dividend or LOC) Assets: Cash $18,206 % of sales ' Accounts Receivable $100,133 % of sales ' Inventories $45,515 % of sales ' Total current assets $163,854 Fixed assets $182,060 % of sales ' Total assets $345,914 Liabilities and equity Accounts payable $31,861 % of sales ' Accruals $27,309 % of sales ' Line of credit $0 Zero in preliminary forecast ' Total current liabilities $59,170 Long-term debt $120,000 Previous Total liabilities $179,170 Common stock $60,000 Previous Retained Earnings $106,745 Previous + Addition to retained earnings ' Total common equity $166,745 Total liabilities and equity $345,914 Identify Financing Decit or Surplus Increase in spontaneous liabilities (accounts payable and accruals) + Increase in long-term bonds, preferred stock and common stock + Net income (in preliminary forecast) minus regular common dividends Increase in nancing '- Increase in total assets Amount of nancing decit or surplus: If decit in nancing (negative), show the amount for the line of credit If surplus in nancing (positive), show the amount of the special dividend a. What are the forecasted levels of the line of credit and special dividends? Required ine of credit Note: we copied values from H99:H1DD when sales growth in (351 = 6%. Special dividends b. Now assume that the growth in sales is only 3% (do this by changing the growth rate in Cell 651). What are the forecasted levels of line of credit and special dividends? Required ine of credit Note: we copied values from H99:H1DD when sales growth in 651 = 3%. Special dividends