[Get Answer ]-Financial Management Questions

Question Description

1) Construct a pro forma income statement for the first year and second year for the following assumptions:•Units of Sales in Year 1: 100,000•Price per Unit: $10•Variable cost per unit: 30%•Fixed Costs: $120,000•Income taxes: 15%•Interest Expense: $200,000•In year 2, Price per unit increases to $11.50, and unit of sales increases by 3%, all other assumptions remain the same.
2) Calculate the sustainable growth based on the following information:•D= 30%•ROE = 25%
3) Calculate a table of interest rates for 5 years based on the following information:•The pure interest rate is 2%•Inflation expectations for year 1 = 3%, year 2 =4%, years 3-5 =5%•The default risk is .1% for year one and increases by .1% over each year•Liquidity premium is 0 for year 1 and increases by .2% each year•Maturity risk premium is 0 for years 1 and 2 and .3% for years 3-5