Problem:
Forecasting Balance Sheet and Income Statements
XieCorp is a pc solutions provider that is looking to expand its operations. Currently it has $500K (K=thousand) to invest in an upgrade in facilities. The goal is the hire additional staff to acquire new customers. Last year 20XX XieCorp made $13M (M=million) in total revenues. Their expenses were 65% of revenue and they were taxed at a rate of 16%.
CEO, Jonathan DoeMan wants to finance $1.5M over 5 years for the expansion of the company which cost $2M. He has been informed the cost of money for this financing is 6.2%. This expansion will result in an increase in annual revenue of $850K per year in years 1-3 and an increase of 1.4M per year in years 4-6.
Mr. DoeMan also wants to invest 50% of the company's annual profit in a money market account which assumes a rate of 8% compounded semi-annually.
Requirements
Assume XieCorps revenue will continue at the level provided, create a basic income statement showing the impact of the additional revenue along with the additional expenses listed above by year over a 5 year period. Showing net income/profit for each year.