Question

You are the owner of a food truck selling paninis and other lunch items. You have been in business for 3 years and your sales are growing at a rate of 20% a year. You still owe $10,000 on your existing truck but based off your research you have determined that you can expand your operations in other areas of the city and make a profit. You have decided to add 2 new food trucks.

Here are the financing facts you will need to consider in your decision making:

• A new food truck, equipment, labor etc can cost upwards of $200,000 each.

create a finance plan for adding two new food vehicles to your operations.

• Break down all the costs you will need to cover with your financing plan.
• You need to decide if you will add food trucks or food trailers.
• What 3 financing methods could you use? Which one will you select? Include why you selected that option and decided against the others.
• What profits do you need to have to pay it back and what is your payback period?

Answer 1

Answer
The breakdown cost I need to cover up in the financing plan include the cost of two food trucks, the different accessories involved in the truck etc .
I will decide to buy food trucks because they are most suitable for my kind of business for selling paninis and other lunch items.
Financing method which can be used in this case are-
1. Financing from government bank
2. Financing from private banks
3. Financing from private institutions
The financing method I will select in this case is financing from government banks because government banks have the lowest rate of interest which is to be paid on the principal amount or the financed amount. They also have flexible terms and conditions and they are not very strict if there is a delay in monthly EMI is of the truck. As compared to private banks and private institutions, government bank have very low interest rate and they also require strong paperwork and documents in order to finance the truck.
The profit which I need to pay back to the government bank is generally 8% of the loan amount per annum and the pay back period 3 years.

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