Presented below is the forecasted data for ABC Corporation: 2023 Sales Cost of Sales Operating Expenses 2022 2024 2025 2026 3,375,000 4,125,000 4,875,000 5,250,000 6,000,000 1,968,750 2,156,250 2,343,750 2,437,500 2,625,000 975,000 1,125,000 1,275,000 1,350,000 1,500,000 Other relevant assumptions are as follows: a. Depreciation included in cost of sales and operating expenses amounted to P750,000 and P150,000 respectively. b. Operating expenses does not yet include any related financing costs. c. Annual capital investment requirements will be P300,000. d. The company estimates growth rate of 5% from 2027 onwards. e. The company has outstanding loans of P2,000,000 which pays 8% annual interest. The loan matures at P400,000 every year. f. The company has debt to equity ratio is 1.5. The pretax cost of equity is 12%. g. ABC Corporation have 1.20 million outstanding shares and is currently selling on the stock market at P35 per share. h. The company is subject to income tax of 30%.

Presented below is the forecasted data for ABC Corporation: 2023 Sales Cost of Sales Operating Expenses 2022 2024 2025 2026 3,375,000 4,125,000 4,875,000 5,250,000 6,000,000 1,968,750 2,156,250 2,343,750 2,437,500 2,625,000 975,000 1,125,000 1,275,000 1,350,000 1,500,000 Other relevant assumptions are as follows: a. Depreciation included in cost of sales and operating expenses amounted to P750,000 and P150,000 respectively. b. Operating expenses does not yet include any related financing costs. c. Annual capital investment requirements will be P300,000. d. The company estimates growth rate of 5% from 2027 onwards. e. The company has outstanding loans of P2,000,000 which pays 8% annual interest. The loan matures at P400,000 every year. f. The company has debt to equity ratio is 1.5. The pretax cost of equity is 12%. g. ABC Corporation have 1.20 million outstanding shares and is currently selling on the stock market at P35 per share. h. The company is subject to income tax of 30%.

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter2: Financial Statements, Cash Flow,and Taxes

Section: Chapter Questions

Problem 21SP: Begin with the partial model in the file Ch02 P21 Build a Model.xlsx on the textbooks Web site. a....

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