Paper, Order, or Assignment Requirements

Please review the attached financials. Mike’s Surf Shop has requested you for a loan of $250,000, repayable in 5 annual installments of $50,000 plus accrued interest @10% each year.

They expect to increase their sales by 20%  each year for next five years as a result of this new investment ( Please assume that all expenses will also increase in the same proportion.)

Please create proforma balance sheet and income statement for the next five years. based on these proforma statements, calculate the free cash flow available to repay the loan.

Please calculate the profitability, efficiency, and coverage ratios for each of the proforma five years.

Please calculate annual repayment for each of the next five years ( amounts will be different each year as the accruing interest will change each year).

Based on your analysis of  the cash flows and repayment coverage please decide if the loan should be granted