You are an entrepreneur developing your first business plan for a business selling over the internet. Right now you are working on the financial plan segment of your business plan and need to estimate the financing needs, both to launch your business and to operate it for the first 12 months during which you estimate you will incur a loss. You intend to apply for a bank loan to cover your first year’s financing needs. You have worked with an Excel spread sheet and tried to determine every single expense you can think of, plus estimating the sales that you are hoping to achieve in the first year. You have developed the following financial estimates:
|
First 12-Months Financial Estimates |
|
|
Sales |
50,000 |
|
Cost of Goods Sold |
20,000 |
|
Salaries |
35,000 |
|
Rent |
25,000 |
|
Insurance |
5,000 |
|
Website development (contracted out) |
20,000 |
|
Selling Expenses |
5,000 |
|
Office Equipment |
5,000 |
|
Payroll Taxes |
3,850 |
|
Computer Equipment |
10,000 |
|
Office Supplies |
2,500 |
Question:
1. How much do you need to project for your Capital Budget needs?
A. $35,000
B. $25,000
C. $10,000
D. $30,000
2. For the internet entrepreneur in the problem above, how much money do you expect to lose on your Profit and Loss Statement in the first year?
A. $46,350
B. $28,475
C. $48,550
D. $65,250
3. The entrepreneur planning to sell on the internet, assuming you have $10,000 in your savings to invest in the business, what is the minimum amount of money you need to borrow to be viable during the first year before you get your business to cash flow breakeven?
A. $71,350
B. $81,350
C. $93,350
D. $36,350
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| Wealth and Income | |||||||||
| Risk | |||||||||
| Near Term Spending | |||||||||
| Monetary Expansion | |||||||||
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| Restrictive Covenent | |||||||||
| Tax Increase | |||||||||
| Currency Appreciation | |||||||||
| Expected Inflation | |||||||||
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