solution

What you hand in: a brief narrative in memo form explaining your answers to Parts A, B, C, and D. You will probably fi nd it useful to include one or two tables in your memo. In an appendix, attach the pro forma statements for each scenario (formatted such that income statement and balance sheet are on one page, sources and uses of cash and the fi nancing module are on another) and a print out of the formulas for your model. (Th ere should be only one formula sheet. You answer the above questions simply by changing the values of your decision parameters and observing the eff ects.) Moreover, include in your appendix a flow chart/decision tree diagram of the logic used to code the Debt repaid line of your fi nancing module.