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Finance question which need to fill out an excel(Please read the description carefully)
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You are interning in the treasury group of a company that recently experienced a large negative shock in the price of their output good. Luckily, the firm still has access to debt markets, and management wants to know how much debt the company may need to issue today in order to be sure to have cash on hand for the next 5 years in the event output prices do not recover for five years. Management is reluctant to consider dividend cuts, but they want the model to be able to accommodate this possibility as well.Build out a pro-forma of the firm with the following assumptions and those in the soft-copy template available on Canvas under Assignments/Final.1. Any new debt will be borrowed over the coming year (that is, it will be included in the year 1 forecasted debt balance), and should be sufficiently large to ensure positive cash balances for the next five years. Debt will remain at this same new level from year 1 through year 5. Management wants the projected year 5 cash balance to equal the current balance of $14. In the interim, they are fine with cash balances floating around. This means that the plug in the model for year 5 is the debt balance, and the plug for years 1-4 is the cash balance.2. The firm will not issue or repurchase stock.3. The output price has declined by 45% relative to year 0 and is expected to remain constant over the five year period. As a result, the number of units sold is expected to be 10% higher over the coming year compared to year 0 unit sales and will remain constant over the five year period.4. Unfortunately, input prices have not fallen. COGS and Inventory are both tied to units sold. Costs are $3.50 per unit. The end-of-period inventory reflects 1/3 of the forecasted cost of the next year’s unit sales (please assume year 6 unit sales are projected to be the same as those from years 1-5).5. The firm will not divest or invest in capital assets, so gross fixed assets will remain constant.6. The firm can take tax credits associated with any operating losses.Build a one-page spreadsheet model to answer the questions listed below:1. Complete the five-year forecasted pro-forma financial statement for the firm assuming dividends paid remain constant. How much new debt must be issued from year 0 to year 1?2. If the firm cuts its dividend, it will do so in the first year (that is, it will remain at the new level from year 1 through year 5). Incorporate a possible dividend cut into your model. Specifically, create a data table and plot that shows the amount of new debt that must be issued from year 0 to year 1 as a function of the magnitude of the dividend cut. Consider dividend cut magnitudes (in % terms) of 0% to 25% in increments of 2.5%. At approximately what dividend cut magnitude would the firm not need any new debt?
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