As was mentioned previously, an opportunity has arisen for the family to purchase a Hyundai dealership. The available business has a very good reputation and high levels of customer satisfaction. One of the characteristics of customers in the automobile market is a lack of the loyalty to brands and models that is often seen in other consumer good markets, for example soda or beer. In other words, the Yates family has noticed that customers don't tend to buy the same type of car again when making a new purchase. Customers will seek to upgrade or try something different even though they have been fully satisfied with their last vehicle purchase. Yates Motors believes the second dealership provides them with an opportunity to satisfy that customer need more fully by having more cars to offer the customer. This will enable them to increase sales and profits by increasing their local market share. The following is a list of the assets and costs of the second dealership:

Financial Investment Analysis

Working Capital
A/R	90,000
Inventory	175,000
Capital Assets
Building	472,000
Furniture & Fittings	98,000
Equipment	75,000
Marketing Costs	40,000
Total Financial Investment Needed	950,000

 

Assignment:

The Yates have been pre-approved for $350,000 mortgage. Your task is to develop a financial requirement plan that can provide guidance on how to raise funds to meet this need. (Note: There are many potential solutions) Please do not include Internal Financing or Mortgages in your answers to a or b

a. Your financial requirement plan must include a minimum of 5 difference sources / forms of financing and meet the financial needs of the business (2 marks)

b. Each source form that you choose to use must be evaluated with a written discussion of the advantages and disadvantages of each set (Source -form). (Minimum one paragraph per source) (20 marks)

c. For the conclusion, outline why your plan is the most suitable set of sources / forms of finance for the company to achieve its goals, using 3 of the 5 choices you made above. Also , explain how these 3 choices will work with the Internal financing and mortgage already arranged. ( 3 marks)