Elsa has planned investments over the next 4 years. It asks you to finalise its financing plan,
Question:
Elsa has planned investments over the next 4 years.
It asks you to finalise its financing plan, whichesis not balanced.
Provisional financing plan in thousands of euros (K€):
K€ | 2015 | 2016 | 2017 | 2018 |
Jobs Distribution of dividendses Capital acquisitions Loan repayment Increase in BFR | 5 200 20 | 5 100 25 | 5 50 35 | 5 50 45 |
TOTAL Employment (1) | 225 | 130 | 90 | 100 |
Ressources The CAF Capital increase Increase ines borrowings | 135 | 140 | 150 | 160 |
TOTAL Ressources (2) | 135 | 140 | 150 | 160 |
Annual balancees Ressourc es – Jobs (2-1) | - 90 | + 10 | + 60 | + 60 |
Cumulative balance | - 90 | - 80 | - 20 | + 40 |
To balance this financing plan, it envisages 2 solutions:
1 - Either take out a loan at the beginning of201 5, of an amount to be determined,at the annual interest rate of 6%, with a partial deferral of 2 years, repayable by constant amortization over 4 years. Corporate tax rate = 1/3.
- - Either call on shareholders to increase the share capital by € 100,000 at the beginning of 2015. The profitability required by shareholders (in the form of dividends) is 10% of the invested capital (consider that the additional dividends will be paid from 2016)
After incorporating thees agreement es of each solution into the financing plan, you will give a reasoned opinion. Use the attached annex document.
N.B.: Round to K€
Annex Final financing plan
Solution 1 – Borrowing
K€ | 2015 | 2016 | 2017 | 2018 |
Jobs Distribution of dividends Capital acquisitions Loan repayments Increase in BFR | ||||
TOTAL (1) | ||||
Rsourceses The CAF Capital increase Increase in borrowingses | ||||
TOTAL(2) | ||||
Annual R&E balance (2-1) | ||||
Cumulative balance |
Solution 2 - Capital increase (1 point)
K€ | 2015 | 2016 | 2017 | 2018 |
Jobs Distribution of dividendses Capital acquisitions Loan repayment Increase in BFR | ||||
TOTAL (1) | ||||
Rsourceses The CAF Capital increase Increase in borrowingses | ||||
TOTAL(2) | ||||
Annual R&E balance (2-1) | ||||
Cumulative balance |
Business Analytics Data Analysis and Decision Making
ISBN: 978-1305947542
6th edition
Authors: S. Christian Albright, Wayne L. Winston