Reference no: EM133004545

Forecast an after-tax cash flows for fiscal 2022, 2023, and 2024 for each of the two financing proposals, assuming the following:

• Revenue increases 5% annually.

• EBITDA margin is 15%.

• Annual depreciation is $8,000,000 with equivalent annual capital cost allowance.

• The line of credit balance will remain at $14,000,000 for the forecast period.

• Annual capital expenditures are $3,000,000 for each year.

• Net working capital investments are $1,500,000 in fiscal 2022 and then increase 5% annually.

• Income tax rate is 25%.

Assume that financing will be advanced in early July, and one year's worth of interest will be paid in fiscal 2022. Conclude on whether the company can comply with the loans' requirements for each of the years forecasted. Provide a recommendation to Agri-Panel as to which financing alternative is preferable