Question: I need help with Module 3 Larry and Janice Martin have decided, after 20 years of working for others, that they want to open their


Larry and Janice Martin have decided, after 20 years of working for others, that they want to open their own business, Computech would be a repair and sales shop in the Kitchener area. Between the two of them they thought that their experience in sales and service, along with their passion to strike out on their own, would serve as a great base. As they prepared their Business Plan and the related financial projections, they knew that there would be many decisions that they would need to consider. This was to be important not only as they were sketching out their plan; but also once the business started operating. In their research, they approached several small business consultants at local banks and with the local small business office of the local government. They were reminded that they need a unique offering, and successful day-to-day management. Beyond planning, operating, and organizing they would need to operate their business and make decisions based on results. To ensure this, they needed the ability to read financial statements and analyze the results of their decisions before considering next steps. Module 1: [3 marks] Larry and Janice intend to invest $250,000 in the business. Their financial projections show that during the first year of operations their bosiness could generate $25,000 in protits (subsequent years could grow well beyond this levei). The couple can borrow $150,000 from the bank ( 6%%, and they can use $100,000 of their savings (consider this "equity"), an 8% return. Q1: Given the above information, if the business is taxes at 33\%, what is Computech's projected return on investment in year 1 ? What is their weighted cost of capital? [2] Q2: 5hould the couple lawnch their business based on your answer to Q1? Why or why not? Note: Answer using less than 20 words, and use abbreviated terms ROl and WACC. [1] Module 2: [4 marks] The Martins will use a projected income Statement to plan their operations: Q1: Use these accounts to prepare CompuTech's income Statement for the year ended December 31,2021. Module 3: [5 marks] Profit decisions are important to the Martins. These decisions arise from understanding the market, pricing policies and margins. The managers need to understand the appropriate tools and elements as they target profit levels and their ability to manage the elements of the profit calculation. For example, if Computech is operating at a loss or below break-even, then must understand how they can manage costs or volumes to generate profits. Break-even analysis can help the Martins and CompuTech decide how many 'packages' they need to sell, what price should they sell at, fixed Module 3: [5 marks] Profit decisions are important to the Martins. These decisions arise from understanding the market, pricing policies and margins. The managers need to understand the appropriate tools and elements as they target profit levels and their ability to manage the elements of the profit calculation. For example, If CompuTech is operating at a loss or below break-even, then must understand how they can manage costs or volumes to generate protits. Break-even analysis can help the Martins and Computech decide how many 'packages' they need to sell, what price should they sell at, fixed costs levels, and what product or service they should promote. Given the following: (i) CompuTech's products are soid for $100 per 'package' (ii) Computech's products cost $60 per 'package' (iii) Fixed costs are determined by the income Statement Q1: Create a data table and CVP table to deflect the available information. (copy and paste your Module 2 work). \{2\} Q2: What is the break-even in units for CompuTech in 2021? [1] Q3: Create a separate data table and CVP to answer the following question: Variable cost of materials rose by 10% during the year, and CompuTech plans to hire a Sheridan student (annual cost for Part Time service is $30,000 per year) to help Computech's marketing. How does the variable cost increase and hire impact CompuTech's break-even? [2]
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