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Today is 1 January 2024. Ella used $200,000 to purchase a florist business in Sydney. To operate this business, Ella needs to pay rent,
Today is 1 January 2024. Ella used $200,000 to purchase a florist business in Sydney. To operate this business, Ella needs to pay rent, maintenance costs, and labor costs. Here are the details: Rent will be paid by the end of each month with an amount of $2,000. Labor cost will be paid by the end of each month with an amount of $10,000. Maintenance cost will be paid by the end of each quarter with an amount of $500. Ella predicts that this florist franchise initially can have monthly revenue of $13,000. Assume that Ella can obtain this amount by the end of each month. Ella forecasts that this revenue amount will increase at the rate of y% p.a. The revenue increase will only happen at the beginning of each year. For example, this florist franchise initially has monthly revenue of $13,000 in 2024. Then the revenue amount will become $13,000(1+%) per month in 2025 and $13,000(1+%) per month in 2026. Ella plans to run this business for three years and predicts that she can sell this business on 1 January 2027 with an amount of $210,000. a. Calculate the monthly net cash flows. Assume that Ella can reinvest all profit at a rate of 4.5% p.a. Use Goal Seek to find revenue increasing rate y% p.a. if Ella requires a holding period yield rate of 7.5% p.a. for this investment (from 1 January 2024 to 1 January 2027). Label this sheet as "Part a".
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Answer Year Monthly Revenue Total Expenses Net Cash Flow 2024 13000 1216667 83433 2025 130001y 12166...Get Instant Access to Expert-Tailored Solutions
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