Question: Question 2 (15 points) You are thinking about opening a food truck focused on Poke Bowls outside of Haas. There is some existing competition, but

Question 2 (15 points) You are thinking about
Question 2 (15 points) You are thinking about opening a food truck focused on Poke Bowls outside of Haas. There is some existing competition, but it serves \"Poke Bowls\" in which the fish is cooked, so no one will go there once your food truck is open. You estimate that it will cost $75k to purchase the truck at time zero. You will also need to purchase $5k of ingredients (inventory), but can pay for the ingredients later (you will have $5k of accounts payable). During your first year of operation, you anticipate sales of $50k. Both raw ingredients and labor, which are the two elements of your costs, are expensive (520k each). Additionally, you will need to invest $5k in truck maintenance to offset the effects of depreciation. You plan to run a cashless business, and will have no accounts receivable or cash. You will maintain a constant level of inventory and accounts payable throughout the year, and you will pay a tax rate of 20%. (a) (1 point) What is the time zero free cash flow? That is, how much cash to do you need to start your business

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!