Interest Income is an optional income stream if assets are not otherwise being fully utilized. For purposes
Question:
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
Essentials of Marketing Research
ISBN: 978-1305263475
6th edition
Authors: Barry J. Babin, William G. Zikmund