Question: Please help me with this question I'm stuck!! :'(( Mella and Max are a couple that wants to start their own fashion label. They intend

 Please help me with this question I'm stuck!! :'(( Mella and

Please help me with this question I'm stuck!! :'((

Mella and Max are a couple that wants to start their own fashion label. They intend to sell their products exclusively via an online store. They decide that to rent a workshop place in the industrial area near the city. The rent for the workshop place including four parking spaces and a loading bay would amount to 1,650 per month. They decide to trademark their company logo and brand name Fluff Paladin before production begins. The associated costs would amount to 9,000. The sewing machines and other necessary production tools they would have to buy before entering production would cost them 12,500. Further, the IT designer who developed their online store and web page invoiced 20,000. Of course, Max and Mella will need an insurance policy which will amount to 3,200 per year, and an accountant which will cost them 900 per year. As of the second year a maintenance expense of 2,800 per year will be necessary in order to replace broken sewing machines and update their web page etc. In order to advertise their new fashion label, they intend to launch a continuous social media campaign with a yearly budget of 14,200. Mella and Max decide to hire three seamstresses which will cost them 80 per day per seamstress. In addition, they will hire a lead creative designer which will cost them 120 per day. They intend to give all their employees a 3% raise per year and their business would be open 260 days per year. They expect to sell 20 jumpers per day at a price of 50 per piece. However, Max and Mella plan to increase the prices for their products by 5% per year. The material for the jumpers (which includes wool, buttons, leather, etc.) for the first year of operation will amount to 60,000 and the material cost is expected to increase by 4% per year. The corporate tax rate that will be applicable for their business is 30% and the expected cost of capital (expected market return) for the next five years is 10%. a) Calculate Mella's and Max's cash-flows for the next 5 years (make sure to identify and differentiate between fixed costs, varying costs and initial investments). b) Calculate the NPV for Mella's and Max's business project. Is their business project Fluff Paladin worth undertaking or not

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