Bonito Gonzalez founded and grew the Bio Systems Manufacturing Corporation over a several-year period. However, Bonito has decided to harvest or exit Bio Systems now at the end of 2010 with the intention of starting a new entrepreneurial venture. The Fuji Electronics Company is considering acquiring Bio Systems, which is 60 percent owned by Bonito Gonzalez; the other 40 percent of the equity is held by venture investors who also desire to exit the venture. However, while the venture is currently profitable, Bonito believes Bio Systems will be entering a period of rapid growth and increasing profitability. Bio Systems' sales are expected to grow from the 2010 level at a 20 percent annual compound rate over each of the next three (2011, 2012, 2013) years. Cost of goods sold, marketing, depreciation, and interest expenses are expected to move or vary with sales (i.e., they are variable expenses). General and administrative (G&A) expenses are expected to remain constant each year (i.e., they are fixed expenses). The income tax rate is expected to be 35 percent.A. Using the percent-of-sales relationships indicated above, prepare Bio Systems' projected income statement for 2013.B. Fuji Electronics has examined other recent acquisitions in Bio Systems' industry and believes that a 17 times price-earnings multiple would be appropriate for valuing Bio Systems. Calculate Bio Systems' equity value at the end of 2013.C. How much should Fuji Electronics be willing to pay for Bio Systems Manufacturing at the end of 2010 if Fuji's management believes the appropriate discount rate is 25 percent?D. What is Gonzalez's portion of the exit proceeds? What is the venture investors' portion of the exit proceeds?E. Bonito Gonzalez invested $50,000 of his own funds in Bio Systems at the end of 2005. What would be the compound rate of return on his investment when the exit (sale to Fuji Electronics) from Bio Systems occurs at the end of 2010?F. The venture investors contributed $500,000 at the end of 2006. What would be their compound rate of return on their investment if Bio Systems is sold at the end of 2010?BIO SYSTEMS MANUFACTURING CORPORATIONINCOME STATEMENT FOR 2010 ($ THOUSANDS)Net sales ............................................ $ 10,000Cost of goods sold ................................... 6,000Gross profit ............................................ 4,000Marketing expenses .................................. 1,000G&A expenses ........................................ 2,000Depreciation ............................................. 200Interest .................................................... 100Income before taxes .................................... 700Taxes (35%) .............................................. 245Net income ............................................. $ 455