create a new set of projections for Years X E and X +1 E.

For this Homework Assignment, your work should be completed on the Week 7 Homework Worksheet (attached to this file). Please make sure you put your name in the appropriate box on the worksheet!

All historical information remains the same (through Year X-1).

Use this new set of assumptions:

• Revenue growth:

30% Year X E

30% Year X + 1 E

• 1% improvement in Gross Margin for Year X E (from year X-1). No further change in the Gross Margin for Year X+1.
• 1% improvement in Selling in Year X E. Same level in Year X+1 E.
• G&A remains constant on a common size basis.
• $10,000 increase in R&D in X E.
• Same R&D level in Year X+1 E.
• Basic Shares outstanding 3,000,000.
• A new section of the existing plant is constructed for $300,000. This new construction is depreciated over 30 years using the straight line method. All other depreciation remains the same for the years X E and X+1 E.
• The plant is financed with a $300,000 10 year bond with a fixed interest payment of 10% annually.
• The Company, for the first time, grants 500,000 options to various members of management with an exercise price of $1.00. These options are granted on the first day of Year X E.
• There are no other options, warrants or convertible securities.
• The average stock price for Year X E and Year X+1 E is projected to be $5.00.
• All other interest payments, interest income and tax rates remain the same.

AutoSave OFF SUE Week 7 Homework worksheet - Spring 2020 View Tell me Home Insert Draw Page Layout Formulas Data Review Share 0 Comments X Times New Roman 16 - APA Insert = - aby Currency Dalate F Paste B Av - $ % Ideas Sensitivity Conditional Format Cell Formatting as Table Styles Format v Sort & Filter Find & Select A1 Xfx 'Your Name Here F K - M R S T U W Y Z AA L L N Use this new set it aspis Revenue growth Your Name Here - Your Name Here In 1 Use this new set of assumptious. Revenue growth 10% Yeu XE 30% Year X+IE Year XE Year X+18 14.09. 2 3 Revenue 4 Cost of Goods Sok 5 Gross Profit Year X- S 1,440,000 921,600 $18,401 36.0% 158,400 100,000 40,000 0,000 336,400 7.5% 2.8% 2.1% co ? Selling General and Administrative 9 Nescach and Developiunt 10 Depreciation and Amortization 11 Total Operating Expenses 12 13 Operating Income 14 15 Interest costs 16 Investino . 1% covement Gross Marea for Year XE (from year X-1). Soutier change in the Gross Marcin for Year X+1. 1% movement in Selling in Yeu XE. Same level in Yeau XIE . GAA remains constant on a size lasis. . $10,000 ince in RD in XE . Same R&D level in Year X+1 E - Basic Shares outstanding - 3,000,000 A new section of the existing plant is constructed for $300,000. This new construction is depreciated over 30 years oing the straight line method. All other depreciation remains the same for the years X and X-15. The plants and with a 5300,000 10 year bond with a fixed wterest pesment of 10% anually. . The Company for the first time is 500,000 options to various membes of management weil an exercise price of 51.00. These opties Tell: l 145 li lich lay last AE. . There are no other options, Wirtants cr convertible securities. The average stock price for Your X End Year X-1 Eis projected to be $5.00 All other interest payments interest income and tax rates remain the same. 182,000 12.6% 0.3% 5,000 4,000 180,000 12.6% 's 117,650 8.2% S EC 18 Pro-Tax Inc 19 Tax (3) 20 Not Inexe 21 22 Tarnings Per Share - Basic 23 Barrings Per Share - Dilula 24 25 Sbares Outstanding 26 Shares For Dihired 27 28 A Options 29 Tx Pride 30 Stock Price 3,000,000 S S 500,000 1.00 5.00