Determine External Funding Requirement for 2016? Income Statement (2015) Revenue 900,000 Costs 600,000 Depreciation160,000 Interest rate = 8% Tax rate = 40% Cash taxes = Financial taxes Cost growth = 15% Revenue growth = 20% Constant A/P to Cost ratio Balance Sheet (12/31/2015) Cash 150,000 A/R 200,000 Net Fixed Assets 800,000 A/P 100,000 Debt 500,000 Capital Spending = 400,000 Debt due = 200,000 Constant A/R to Sales ratio Depreciation period = 5 yrs Solution Current Projected revenue $        900,000 $ 1,080,000.0 costs $        600,000 $ 690,000.00 Depreciation $        160,000 $      160,000 EBIT $        140,000 $      230,000 Interest rate $          11,200 $        18,400 EAIBT $        128,800 $      211,600 Tax rate 40% 40% Cash taxes $          51,520 $        84,640 Net profit $          77,280 $      126,960 2015 2016 2015 2016 AP $   100,000 $   115,000 Cash $      150,000 $   227,280 Debt $   500,000 $   500,000 AR $      200,000 $   240,000 Capital spending $   400,000 $   400,000 Net fixed asset $      800,000 $   800,000 Debt due $   200,000 $   200,000 Retained earnings $     77,280 $   126,960 $1,277,280 $1,341,960 $   1,150,000 $1,267,280 External funding = 1341960 - 1267280 $     74,680 .

1. Determine External Funding Requirement for 2016?
Income Statement (2015)
Revenue 900,000
Costs 600,000
Depreciation160,000
Interest rate = 8%
Tax rate = 40%
Cash taxes = Financial taxes
Cost growth = 15%
Revenue growth = 20%
Constant A/P to Cost ratio
Balance Sheet (12/31/2015)
Cash 150,000
A/R 200,000
Net Fixed Assets 800,000
A/P 100,000
Debt 500,000
Capital Spending = 400,000
Debt due = 200,000
Constant A/R to Sales ratio
Depreciation period = 5 yrs

2. Solution
Current Projected revenue $Â Â Â Â Â Â Â 900,000 $ 1,080,000.0 costs $Â Â Â Â Â Â Â
600,000 $ 690,000.00 Depreciation $Â Â Â Â Â Â Â 160,000 $Â Â Â Â Â 160,000 EBIT
$Â Â Â Â Â Â Â 140,000 $Â Â Â Â Â 230,000 Interest rate $Â Â Â Â Â Â Â Â Â 11,200
$Â Â Â Â Â Â Â 18,400 EAIBT $Â Â Â Â Â Â Â 128,800 $Â Â Â Â Â 211,600 Tax rate
40% 40% Cash taxes $Â Â Â Â Â Â Â Â Â 51,520 $Â Â Â Â Â Â Â 84,640 Net profit
$Â Â Â Â Â Â Â Â Â 77,280 $Â Â Â Â Â 126,960 2015 2016 2015 2016 AP $Â Â 100,000
$Â Â 115,000 Cash $Â Â Â Â Â 150,000 $Â Â 227,280 Debt $Â Â 500,000 $Â Â 500,000
AR $Â Â Â Â Â 200,000 $Â Â 240,000 Capital spending $Â Â 400,000 $Â Â 400,000 Net
fixed asset $Â Â Â Â Â 800,000 $Â Â 800,000 Debt due $Â Â 200,000 $Â Â 200,000
Retained earnings $Â Â Â Â 77,280 $Â Â 126,960 $1,277,280 $1,341,960 $Â Â 1,150,000
$1,267,280 External funding = 1341960 - 1267280 $Â Â Â Â 74,680