A B C D E F

1 FINANCING ASSUMPTIONS
2
3
4 Interest rate on long-term debt 11%
5 Interest rate on notes payable 9%
6
7 Year 0 1 2 3
8
9 Long-term debt outstanding 200 200 200 200
10 Bank notes payable - 28 69 62
11
12 Net new equity capital raised 300 - - -
13 Dividends paid (as positive number) - - -
14
15
16 FINANCING CALCULATIONS
17
18 Interest Expense
19
20 Year 0 1 2 3
21
22 Long-term debt 22.0 22.0 22.0
23 Bank notes payable 1.3 4.4 5.9
24 Total 23.3 26.4 27.9
25
26 Cash Balance
27
28 Year 0 1 2 3
29
30 Beginning cash balance - #REF! #REF! #REF!
31 Plus cash flow from ops, invests, and fin #REF! #REF! #REF! #REF!
32 Ending cash balance #REF! #REF! #REF! #REF!
33 Less minimum cash balance required #REF! #REF! #REF! #REF!
34 Excess cash #REF! #REF! #REF! #REF!
35
36 It is undesirable to hold excess cash when there are bank notes outstanding.
37 The cash should be used to reduce the bank loan. To do this, minimize the
38 present value of the interest expense subject to excess cash being
39 nonnegative. Click on Solver (from the Tools menu), click on Solve in the next box
40 that appears, and click on OK in the next box.
41
42 Present value of interest on bank notes 9.38

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 A B C D E F
1 INCOME STATEMENTS
2
3 Year 0 1 2 3
4
5 Sales #REF! #REF! #REF!
6 Less COGS #REF! #REF! #REF!
7 Gross profit #REF! #REF! #REF!
8 Less SG&A expenses #REF! #REF! #REF!
9 Less depreciation #REF! #REF! #REF!
10 Earnings before interest and taxes #REF! #REF! #REF!
11 Less interest expense (23) (26) (28)
12 Pre-tax income #REF! #REF! #REF!
13
14 Cumulative pre-tax income (NOL) #REF! #REF! #REF!
15 Taxes #REF! #REF! #REF!
16
17 Pre-tax income #REF! #REF! #REF!
18 Less taxes #REF! #REF! #REF!
19 Net income #REF! #REF! #REF!
20
21 Note: Net operating losses can be carried forward or backwards. There is a limit on the
22 number of years they can be carried forward or backwards, but this is not incorporated
23 into the spreadsheet.

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 A B C D E
1 BALANCE SHEETS
2
3
4 Year 0 1 2 3
5
6 Cash #REF! #REF! #REF! #REF!
7 Inventory #REF! #REF! #REF! #REF!
8 Accounts receivable #REF! #REF! #REF! #REF!
9 Total current assets #REF! #REF! #REF! #REF!
10
11 Gross property, plant & equipment #REF! #REF! #REF! #REF!
12 Less accumulated depreciation #REF! #REF! #REF! #REF!
13 Net property, plant & equipment #REF! #REF! #REF! #REF!
14
15 Total assets #REF! #REF! #REF! #REF!
16
17 Accounts payable #REF! #REF! #REF! #REF!
18 Bank notes payable - 28 69 62
19 Total current liabilities #REF! #REF! #REF! #REF!
20
21 Long-term debt 200 200 200 200
22 Shareholders equity 300 #REF! #REF! #REF!
23 Total long-term debt and shareholders equity 500 #REF! #REF! #REF!
24
25 Total liabilities #REF! #REF! #REF! #REF!

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 A B C D E
1 STATEMENTS OF CASH FLOWS
2
3
4 Year 0 1 2 3
5
6 Net income #REF! #REF! #REF!
7 Plus depreciation #REF! #REF! #REF!
8 Less increase in inventory #REF! #REF! #REF! #REF!
9 Less increase in accounts receivable #REF! #REF! #REF! #REF!
10 Plus increase in accounts payable #REF! #REF! #REF! #REF!
11 Cash flow from operations #REF! #REF! #REF! #REF!
12 Less investment #REF! #REF! #REF! #REF!
13 Cash flow from operations and invests #REF! #REF! #REF! #REF!
14 Plus net new equity capital raised 300 - - -
15 Less dividends paid - - - -
16 Plus net new long-term debt 200 - - -
17 Plus net new bank borrowings - 28 40 (7)
18 Cash flow from ops, invests, and fin #REF! #REF! #REF! #REF!
19 Beginning cash balance - #REF! #REF! #REF!
20 Ending cash balance #REF! #REF! #REF! #REF!

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