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Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8
Assumptions:
Sales Growth % 0 1.03 1.03 1.03 1.03 1.03 1.03 1.03 1.03
Cost of Sales (COS) as % of Sales 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5
Sales, General & Admin. Exp. as % of Sales 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
Depreciation as % of Sales 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03
Amortization as % of Sales 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01
Interest on Cash & Marketable Securities % 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03
Interest on Senior Debt % 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07
Interest on Subordinated Debt % 0.09 0.09 0.09 0.09 0.09 0.09 0.09 0.09 0.09
Tax rate 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4
Cash & Marketable Securities as % Sales 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01
Change in Working Capital as % of Sales 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02
Capital Expenditues as % of Sales 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03
Sales 500.0 515.0 530.5 546.4 562.8 579.6 597.0 614.9 633.4
Less: Cost of Sales 250.0 257.5 265.2 273.2 281.4 289.8 298.5 307.5 316.7
Less: Sales, General Admin. Exp. 50.0 51.5 53.0 54.6 56.3 58.0 59.7 61.5 63.3
Equals: EBITDA 200.0 206.0 212.2 218.5 225.1 231.9 238.8 246.0 253.4
Less: Depreciation 15.0 15.5 15.9 16.4 16.9 17.4 17.9 18.4 19.0
Less: Amortization 5.0 5.2 5.3 5.5 5.6 5.8 6.0 6.1 6.3
($Millions)
Problem 13-11 Solution to Part B
