2 You have put together a business plan to start up your own company supply devices for controlling household devices through "The Internet of Things". Your technology company has been trading for 6 months and is gaining some traction in the market. Your sales are growing steadily and your investors need to check if your cash flow is sufficient for the next four months. They have asked you to prepare a cash flow projection to assess the funding requirements of your firm. You currently have overdraft facilities of 100,000 with your bank. Your account is 42,000 overdrawn. You have a start-up loan of 150,000, which has monthly repayments of 4,250. Your rent is 2,000 per month and your utility bills amount to 250 p/m. Your expected sales for the period are Sales Projections Feb Mar 29000 43000 April 62000 May 74000 Your projected purchases for the period are: Purchases for Resale Feb Mar April 26000 34000 40000 May 48000 Advertising and website costs are normally 500 per month with a tradeshow in the UK costing 7,000 extra in March. Based on the sales projections your freight costs are expected to vary monthly as follows: Feb Mar April Freight 1,500 2,250 2,560 May 2,850 (i) Prepare a cash flow projection for the period Feb-May (20 marks) (ii) Examine your cash flow. Will you have enough funds to meet your commitments each month? (iii) If you need an injection of funds to clear your overdraft and still have 100,000 cash available, how much would you need? (2 marks) (3 marks) (iv) Explain, briefly, the relevance and importance of a cash flow projection? (8 marks)