CLARK'S SPORTING GOODS Dave Clark plans to open a specialty sporting goods store in London, Ontario, as soon as he graduates from university there in the spring. Dave's concept is to go after X-game-type sports, offering both high-end and entry-level equipment and safety products that local residents would normally have to source online. He would also be quick to add trendy and unique products like the Freebord, which allows users to simulate snowboarding on pavement. Dave did a market demand analysis for such a store for one of his course projects and is confident the opportunity exists. Dave's major problem is determining the amount of funds he will require. His father, will lend him $30,000 as a graduation gift to invest. He has located a store that rents for $3,000 per month (in advance) and has made an itemized list of the start-up costs as follows: $100,000 5,000 4,000 800 Merchandise (4 months) Shelves, racks, displays Remodelling Cash register (used) Check out counter Office supplies (4 months' supply) Telephone & Internet (annually Utilities: $200/month 500 200 1500 2400 Dave has made the following estimates: He can completely turn over his inventory every four months. In the first year, he plans a 60 percent markup on the cost of merchandise. He can get by on a salary of $2000 per month He plans to hire one full-time employee at $2500 per month and one part-time employee at $1000. He plans to spend $2000 in opening promotion in the first month and $500 a month after the grand opening for advertising . Questions 1. Estimate how much money Dave will need from outside sources to start his business, 2. Assuming Dave receives start-up financing from a local government program, the amount calculated in Question 1, will he require an operating line of credit during the first four months of operation? If so, how much? 3. Should Dave pursue debt or equity sources of funds to get started? 4. How could Dave quickly evaluate the likelihood of success of his business? 5. Should Dave open up this business? Why or why not