What are the additional funds needed in Year 3?а.-$225.363 millionb.$63.243 millionC.$125.363 milliond.$189.900 millionе.$299.990 million Blockbuster is a North American video and DVD sales and rental chain. Forecastthe financial statements for Blockbuster for Year 3. Use the percent of salesmethod based on Year 2 and the assumptions listed below. Please note theratios to sales provided in the table which are useful for making the forecast. Inthe 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%. Thedepreciation rate is 25%. CAPEX is $200M. The following accounts are heldconstant: Goodwill and Common Stock. Long-term debt is the PLUG account.No dividends.Blockbuster Inc.Income Statement and Balance SheetAs of December 31, Year 2 ($000's)Year 2RatiosForecastRevenue$5,157,600$5,673,360COGS2,420,7000.469346SG&A2,708,5000.525147Dep. Exp.246,600ЕBIT-218,200Int. Exp.78,200Income before Tax-296,400Income Taxes-56,100Net Income-$240,300ASSETSTotal Current Assets716,4000.138902PP&E909,000Goodwill6,127,0006,127,000Total Assets$7,752,400LIABILITIES AND OWNERS'EQUITYTotal Current Liabilities1,268,8000.246006Long-Term Debt734,900Total Liabilities$2,003,700Owners' EquityCommon Stock6,075,8006,075,800Retained Earnings-327,100Total Stockholder Equity5,748,700Total Liabilities andOwners' Equity7,752,400

AFN stands for Additional Funds Needed, which is a financial metric used to determine the amount of…

Answered: What are the additional funds needed in…

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

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

Problem 1PS

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Question

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

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JJ. 173.
10B
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Annual cash inflows from two competing investment projects are given below: Investment A $ 4,000 5,000 6,000 7,000 $ 22,000 Year 1234 The discount rate is 10%. Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables. Required: Compute the present value of the cash inflows for each investment. Year 1 2 3 4 $ Investment B $ 7,000 6,000 5,000 4,000 $ 22,000 Present Value of Cash Flows Investment A 0 $ Investment B 0 M ...

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