Other
financial management questions

Question Description

I’m studying for my class and don’t understand how to answer this. Can you help me study?

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

Student has agreed that all tutoring, explanations, and answers provided by the tutor will be used to help in the learning process and in accordance with Studypool's honor code & terms of service.

Final Answer

Reshmi (17)
Carnegie Mellon University

Anonymous
Top quality work from this tutor! I’ll be back!

Anonymous
Just what I needed… fantastic!

Anonymous
Use Studypool every time I am stuck with an assignment I need guidance.

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4
Similar Questions
Related Tags