Instructions: For this assignment, you will use MS Excel files containing the Balance Sheet and Income Statement for ABC Corp. ABC Corp is currently planning for next year's sales and asked their financial analysts to prepare a financial plan for the next year so the company can begin to address any outside investment requirements. 1. Calculate the internal growth rate and sustainable growth rate for ABC Corp. What do these numbers mean? The product and marketing departments at ABC Corp are estimating a growth rate of 15 percent for next year. Consider the two distinct scenarios below: A. Assume fixed assets increase proportionally to sales and will be depreciated at a similar rate to existing fixed assets. B. Assume that, to increase production, ABC Corp must set up an entirely new location at a cost of $10,000,000. The new fixed assets will be depreciated at 10% a year. Given the scenarios above: 2. Calculate the EFN for the company for each of the scenarios assuming the company is operating at full capacity today (i.e. 100% utilization). Can the company's sales increase at this growth rate? What will be the capacity utilization for the company next year? 3. Discuss the methodology used above. What would you likely change if you operated in an environment in which certain balance sheet items don't vary proportionally with sales? Income Statement Sales $80,518,460 COGS -$58,672,892 Other expenses -$10,210,200 Depreciation -$3,608,440 EBIT $8,026,928 Interest -$1,261,040 Taxable income $6,765,888 Taxes (40%) -$2,706,355 Net income $4,059,533 Dividends Add to RE $1,220,000 $2,839,533 Assets Current assets Cash Accounts rec. Inventory Total CA Balance Sheet Liabilities and Equity Current liabilities $912,870 Accounts payable $1,858,010 $1,466,250 Notes payable $4,242,700 $2,146,360 Total CL $6,100,710 $4,525,480 Long-term debt $11,000,000 Fixed assets Net PP&E $35,446,860 Shareholder equity Common stock Retained earnings Total equity $800,000 $22,071,630 $22,871,630 Total Assets $39,972,340 Total L&E $39,972,340