191 19 0 0 0 . 0 0 0 0 0 0 0 0 12 MonthCashFlow Projected Financial Statement Expenditure Report Capstick Muffler 12-Month Cash Flow Period Beginning 1/1/20 01/01 791 107101 12/1/91 1/1/92 2/192 3/1/20 4/1/20 Period Ending 7/15/21 Cash at Beginning of Period 0 o 0 0 0 Cash at End of Period 0 O 0 0 0 Operations Janyy Juny July uary Sepy Octyy Novy Decyy Jany Febyy Mary Apryy Cash recipes from Customers Other operations Cash paid for Inventory purchases General operating and Advertisement Wage expenses Depreciation Income taxes Net Cash Flow from Operations 0 Insert Text Box Below What is the Minimum Price you would be willing to Pay Businesse 12 months are the only cash flows Use this Space for your NPV Calculation Amma Disc Rate of 0 o 0 0 0 0 D 0 0 0 9:219 Done FIN1013 Async Assignment 2_bd... 12 Month CashFlow Projected Financial Statement Expenditure Report Exhibit Capstick Mutfor Limited Projected Income Statement For Year Ended April 30, 1991 Sales (219.780 105) 5230 Cost of Mufflers Sold Gross Profe 14577 Expenses Accounting & Legal $1.575 Advertising & Promotion 12.500 4200 Interest Bank Charges 15701 Miscellaneous 253 Welding Supplies 9231 Civile Taxes 100 Urises | 6300 2.100 Wages & Benefits Net Income before Depreciation Depreciation Net Income before Income Taxes Income Taxes Net Income Vahid . 9:217 62 July 9.2 73 42 Done FIN1013 Async Assignment 2_bd... 12MonthCash Flow Projected Financial Statement Expenditure Report Percentage of Yearty Sales by Month Month Month May 11.6 September 73 January June 11.9 October 5.5 February 73 November March August 9.7 December April 100 Source: Company Records Finally, in forecasting his new facility's first-year sales, Capstick projected a 5% inflation rate base, increase in prices to take effect on May 1st Capstick felt that general iontato induced increases in costs could be passed on through corresponding increases in sales prices Projected Cash Expenditures Capstick based his expense projections for the year (see Exhibit 1)on (1) his previous years experience with adjustments where necessary for increased costs due to the new larger shop. (2) his in-town location. (3) his use of debt financing to establish this new shop. (4the Implementation of a new promotion strategy and (5) the current inflation rate Production supplies were a major expense for the muffler shop: the cost of muliers was 38% of sales and the cost of welding supplies was 4% of sales. Although the cost of muliers could vary somewhat, Capstick expected no change in the percentage cost of welding supplies. The mufflers and welding supplies were purchased on 30-day terms in the month preceding the sale, Wages, also a mejor expense, were paid out equally over the year Another major expense was the financing charges on the $121.500 bank loan being negotiated by Capstick to finance the new shop. Interest and bank charges were to be paid monthly, with interest calculated on the outstanding loan balance at a floating rate of interest of prime (currently 12%) plus 1%. A $1,012.50 principal repayment on the loan was also payable monthly. Bank charges were estimated to be $50 per month (net of inflation) Capstick's new promotion strategy was also expected to result in substantial cash expenditures. To launch his new muffler shop. Capstick intended to spend about 20% of his yearly advertising budget in April on "Opening Soon messages and 30% in May on Now Open" messages. This heavy up-front expenditure was also intended to impress Capstick's quality and accessibility on the market right at the start of the peak season period. The remainder of the advertising budget was being spent equally over the remaining ten months to sustain customer awareness levels. Advertising purchases were made on 30-day terms. Capstick's depreciation expense was also expected to increase to about 55 400 because of the acquisition of new capital assets. The remainder of Capstick's expenses with the exception of income taxes) were expected to be incurred, and paid for, equally over the year Finally, because Capstick planned to incorporate his new muffier shop, it would have to pay income taxes at the rate of 22%. Although this expense would be paid after the company's fiscal year-end, Capstick planned to include it in his projected April 1991 cash disbursements to assist in cash flow planning 191 19 0 0 0 . 0 0 0 0 0 0 0 0 12 MonthCashFlow Projected Financial Statement Expenditure Report Capstick Muffler 12-Month Cash Flow Period Beginning 1/1/20 01/01 791 107101 12/1/91 1/1/92 2/192 3/1/20 4/1/20 Period Ending 7/15/21 Cash at Beginning of Period 0 o 0 0 0 Cash at End of Period 0 O 0 0 0 Operations Janyy Juny July uary Sepy Octyy Novy Decyy Jany Febyy Mary Apryy Cash recipes from Customers Other operations Cash paid for Inventory purchases General operating and Advertisement Wage expenses Depreciation Income taxes Net Cash Flow from Operations 0 Insert Text Box Below What is the Minimum Price you would be willing to Pay Businesse 12 months are the only cash flows Use this Space for your NPV Calculation Amma Disc Rate of 0 o 0 0 0 0 D 0 0 0 9:219 Done FIN1013 Async Assignment 2_bd... 12 Month CashFlow Projected Financial Statement Expenditure Report Exhibit Capstick Mutfor Limited Projected Income Statement For Year Ended April 30, 1991 Sales (219.780 105) 5230 Cost of Mufflers Sold Gross Profe 14577 Expenses Accounting & Legal $1.575 Advertising & Promotion 12.500 4200 Interest Bank Charges 15701 Miscellaneous 253 Welding Supplies 9231 Civile Taxes 100 Urises | 6300 2.100 Wages & Benefits Net Income before Depreciation Depreciation Net Income before Income Taxes Income Taxes Net Income Vahid . 9:217 62 July 9.2 73 42 Done FIN1013 Async Assignment 2_bd... 12MonthCash Flow Projected Financial Statement Expenditure Report Percentage of Yearty Sales by Month Month Month May 11.6 September 73 January June 11.9 October 5.5 February 73 November March August 9.7 December April 100 Source: Company Records Finally, in forecasting his new facility's first-year sales, Capstick projected a 5% inflation rate base, increase in prices to take effect on May 1st Capstick felt that general iontato induced increases in costs could be passed on through corresponding increases in sales prices Projected Cash Expenditures Capstick based his expense projections for the year (see Exhibit 1)on (1) his previous years experience with adjustments where necessary for increased costs due to the new larger shop. (2) his in-town location. (3) his use of debt financing to establish this new shop. (4the Implementation of a new promotion strategy and (5) the current inflation rate Production supplies were a major expense for the muffler shop: the cost of muliers was 38% of sales and the cost of welding supplies was 4% of sales. Although the cost of muliers could vary somewhat, Capstick expected no change in the percentage cost of welding supplies. The mufflers and welding supplies were purchased on 30-day terms in the month preceding the sale, Wages, also a mejor expense, were paid out equally over the year Another major expense was the financing charges on the $121.500 bank loan being negotiated by Capstick to finance the new shop. Interest and bank charges were to be paid monthly, with interest calculated on the outstanding loan balance at a floating rate of interest of prime (currently 12%) plus 1%. A $1,012.50 principal repayment on the loan was also payable monthly. Bank charges were estimated to be $50 per month (net of inflation) Capstick's new promotion strategy was also expected to result in substantial cash expenditures. To launch his new muffler shop. Capstick intended to spend about 20% of his yearly advertising budget in April on "Opening Soon messages and 30% in May on Now Open" messages. This heavy up-front expenditure was also intended to impress Capstick's quality and accessibility on the market right at the start of the peak season period. The remainder of the advertising budget was being spent equally over the remaining ten months to sustain customer awareness levels. Advertising purchases were made on 30-day terms. Capstick's depreciation expense was also expected to increase to about 55 400 because of the acquisition of new capital assets. The remainder of Capstick's expenses with the exception of income taxes) were expected to be incurred, and paid for, equally over the year Finally, because Capstick planned to incorporate his new muffier shop, it would have to pay income taxes at the rate of 22%. Although this expense would be paid after the company's fiscal year-end, Capstick planned to include it in his projected April 1991 cash disbursements to assist in cash flow planning