Start with the partial model in the file Ch$09$ P$10$ Build a Model.xlsx$,$ which contains the $2021$ financial statements of Zieber Corporation. Forecast Zieber's $2022$ income statement and balance sheets. Use the following assumptions: $(1)$ Sales grow by $7\%.(2)$ The ratios of expenses to sales, depreciation to fixed assets, cash to sales, accounts receivable to sales, inventories to sales, fixed assets to sales, accounts payable to sales, and accruals to sales will be the same in $2022$ as in $2021.(3)$ Zieber 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 a $10\%$ rate. $(7)$ The tax rate is $25\%.$

Calculate the additional funds needed $($AFN$).$ If new financing 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, pay a special dividend.

The data has been collected in the Microsoft Excel file below. Download the spreadsheet and perform the required analysis to answer the questions below. Do not round intermediate calculations. Enter your answers in thousands. For example, an answer of $$1\mathrm{.}23$ thousand should be entered as $1\mathrm{.}23,$ not $1,230.$ Round your answers to two decimal places. If your answer is zero, enter $"0".$

Download spreadsheet Ch$09$ P$10$ Build a Model$-94$f$4$ca$.$xlsx

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 financing deficit or surplus in this preliminary forecast and then add a new column that shows the final forecast that includes any new line of credit or special dividend.$)$

Required line of credit $ fill in the blank $2$

thousand

Special dividends $ fill in the blank $3$

$0$

thousand

Now assume that the growth in sales is only $3\%.$ What are the forecasted levels of the line of credit and special dividends?

Required line of credit $ fill in the blank $4$

thousand

Special dividends $ fill in the blank $5$

thForecasting Financial Statements

Sales growth rate $7\%$

Dividend growth rate $10\%$

Interest rate on long$-$term debt $11\%$

Interest rate on line of credit $12\%$

Tax rate $25\%$

a$.$ Determining the forecasted levels of the line of credit and special dividends

Zeiber's Projected Financial Statements

$($Thousands of Dollars$)$

$1.$ Balance Sheets $20212021$ Historical ratios Forecasting basis $2022$ Input ratios $2022$ Preliminary forecast $($doesn$\text{'}$t include special dividend or LOC$)2022$ Final forecast $($includes special dividend or LOC$)$

Assets:

Cash $$17,834\mathrm{.}00\%$ of sales

Accounts receivable $102,545\mathrm{.}50\%$ of sales

Inventories $40,126\mathrm{.}50\%$ of sales

Total current assets $$160,506\mathrm{.}00$

Fixed assets $178,340\mathrm{.}00\%$ of sales

Total assets $$338,846\mathrm{.}00$

Liabilities and equity

Accounts payable $$26,751\mathrm{.}00\%$ of sales

Accruals $22,292\mathrm{.}50\%$ of sales

Line of credit $0\mathrm{.}00$ Zero in preliminary forecast

Total current liabilities $$49,043\mathrm{.}50$

Long$-$term debt $130,000\mathrm{.}00$ Carry over from previous year

Total liabilities $$179,043\mathrm{.}50$

Common stock $60,000\mathrm{.}00$ Carry over from previous year

Retained earnings $99,802\mathrm{.}50$ Previous RE $+$ Add. to RE

Total common equity $$159,802\mathrm{.}50$

Total liabilities and equity $$338,846\mathrm{.}00$

$2.$ Income Statements $20212021$ Historical ratios Forecasting basis $2022$ Input ratios $2022$ Preliminary forecast $($doesn$\text{'}$t include special dividend or LOC$)2022$ Final forecast $($includes special dividend or LOC$)$

Sales $$445,850\mathrm{.}00$ Growth

Expenses $($excluding depr. & amort.$)378,972\mathrm{.}50\%$ of sales

Depreciation and amortization $14,267\mathrm{.}20\%$ of fixed assets

EBIT $$52,610\mathrm{.}30$

Interest expense on long$-$term debt $12,480\mathrm{.}00$ Interest rate $\backslash$times Average debt during year

Interest expense on line of credit $0\mathrm{.}00$

EBT $$40,130\mathrm{.}30$

Taxes $(25\%)10,032\mathrm{.}58$

Net income $$30,097\mathrm{.}73$

Regular common dividends $$15,052\mathrm{.}00$ Growth

Special dividends $0\mathrm{.}00$ Zero in preliminary forecast

Addition to retained earnings $$15,045\mathrm{.}73$

$3.$ Elimination of the Financial Deficit or Surplus

Increase in spontaneous liabilities $($accounts payable and accruals$)$

$+$ Increase in long$-$term bonds and common stock

$+$ Net income $($in preliminary forecast$)$ minus regular common dividends

$-$ Previous line of credit

Increase in financingousand