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)

What are the additional funds needed in Year 3?

Question

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)

What are the additional funds needed in Year 3?

Quizplus · Accepted Answer

AFN = 11ea7fdb_fc45_596a_a768_599e7ea993f2_TB2902_11 - 11ea7fdb_fc45_596b_a768_858e275edd44_TB2902_11 AFN = $798,143 - $734,900
AFN = $63,243
Blockbuster will require additional funds of $63.243 million.
Blockbuster Inc.
Income Statement and Balance Sheet
As of December 31, Year 2 ($000's)
 11ea7fdb_fc45_596c_a768_7350e1b8038c_TB2902_00

Blockbuster Is a North American Video and DVD Sales and Rental