Interest Income is an optional income stream if assets are not otherwise being fully utilized. For purposes of this exercise disregard corporate income tax and asset depreciation. Assume investors will retain all funds in the company for the first three years.

Appendix 1: Include a projected cash-flow statement for years one through three. Search the internet and industry websites for approximate revenues / expenses. Show beginning / ending cash balances for each of the first three years … starting with $1 million start-up capital. Include additional appendices if warranted.  

YEAR 1 YEAR 2 YEAR 3 

Starting Cash$1,000,000$ 930,000$ 955,000 

Gross Revenues$ 400,000$ 450,000$ 550,000

Less Cost of Goods Sold$ 200,000$ 225,000$ 275,000 

Operating Profit$ 200,000$ 225,000$ 275,000 

Less Fixed Costs: Wages$ 100,000$ 100,000$ 125,000

Leaseholds/Equipment$ 75,000$ 10,000$ 10,000 

Rent$ 60,000$ 60,000$ 60,000

Line-of-Credit/Interest$ 0$ 0$ 0 

Fees & Insurance$ 5,000$ 5,000$ 5,000 

Promotion$ 30,000$ 25,000$ 25,000 

Total Fixed Costs$ 270,000$ 200,000$ 225,000 

Net Profit (Loss)($ 70,000)$ 25,000$ 50,000 

Interest (e.g. $500k x2%)$ 10,000$ 10,000$ 10,000 

Ending Cash$ 940,000$ 965,000$1,015,000