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What are the additional funds needed in Year 3? a. -$225.363 million b. $63.243 million C. $125.363 million d. $189.900 million e. $299.990 million

What are the additional funds needed in Year 3? a. -$225.363 million b. $63.243 million C. $125.363 million d. $189.900 million e. $299.990 million

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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What are the additional funds needed in Year 3? а. -$225.363 million b. $63.243 million C. $125.363 million d. $189.900 million е. $299.990 million
Transcribed Image Text:What are the additional funds needed in Year 3? а. -$225.363 million b. $63.243 million C. $125.363 million d. $189.900 million е. $299.990 million
Blockbuster is a North American video and DVD sales and rental chain. Forecast the financial statements for Blockbuster for Year 3. Use the percent of sales method based on Year 2 and the assumptions listed below. Please note the ratios to sales provided in the table which are useful for making the forecast. In the event that taxable income is negative, calculate taxes in the usual way. Negative taxes can be interpreted as a tax refund. Sales growth of 10%. The cost of debt is 7.5%. The tax rate is 35%. The depreciation rate is 25%. CAPEX is $200M. The following accounts are held constant: Goodwill and Common Stock. Long-term debt is the PLUG account. No dividends. Blockbuster Inc. Income Statement and Balance Sheet As of December 31, Year 2 ($000's) Year 2 Ratios Forecast Revenue $5,157,600 $5,673,360 COGS 2,420,700 0.469346 SG&A 2,708,500 0.525147 Dep. Exp. 246,600 ЕBIT -218,200 Int. Exp. 78,200 Income before Tax -296,400 Income Taxes -56,100 Net Income -$240,300 ASSETS Total Current Assets 716,400 0.138902 PP&E 909,000 Goodwill 6,127,000 6,127,000 Total Assets $7,752,400 LIABILITIES AND OWNERS' EQUITY Total Current Liabilities 1,268,800 0.246006 Long-Term Debt 734,900 Total Liabilities $2,003,700 Owners' Equity Common Stock 6,075,800 6,075,800 Retained Earnings -327,100 Total Stockholder Equity 5,748,700 Total Liabilities and Owners' Equity 7,752,400
Transcribed Image Text:Blockbuster is a North American video and DVD sales and rental chain. Forecast the financial statements for Blockbuster for Year 3. Use the percent of sales method based on Year 2 and the assumptions listed below. Please note the ratios to sales provided in the table which are useful for making the forecast. In the event that taxable income is negative, calculate taxes in the usual way. Negative taxes can be interpreted as a tax refund. Sales growth of 10%. The cost of debt is 7.5%. The tax rate is 35%. The depreciation rate is 25%. CAPEX is $200M. The following accounts are held constant: Goodwill and Common Stock. Long-term debt is the PLUG account. No dividends. Blockbuster Inc. Income Statement and Balance Sheet As of December 31, Year 2 ($000's) Year 2 Ratios Forecast Revenue $5,157,600 $5,673,360 COGS 2,420,700 0.469346 SG&A 2,708,500 0.525147 Dep. Exp. 246,600 ЕBIT -218,200 Int. Exp. 78,200 Income before Tax -296,400 Income Taxes -56,100 Net Income -$240,300 ASSETS Total Current Assets 716,400 0.138902 PP&E 909,000 Goodwill 6,127,000 6,127,000 Total Assets $7,752,400 LIABILITIES AND OWNERS' EQUITY Total Current Liabilities 1,268,800 0.246006 Long-Term Debt 734,900 Total Liabilities $2,003,700 Owners' Equity Common Stock 6,075,800 6,075,800 Retained Earnings -327,100 Total Stockholder Equity 5,748,700 Total Liabilities and Owners' Equity 7,752,400
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