Bold Brands Limited (BBL) is a marketing agency that provides brand communication services to organisations in the retail sector. Market research has indicated a demand for digital communication services of R600 million, increasing by at least

20% per year.

BBL is considering launching digital marketing communication services on 1 January 2021. The company's strategic forecasting horizon is three years. You have been asked to assist with cash-flow forecasting for BBL to introduce the

new service.

The following information is available:

The company's existing services have created high brand equity through client loyalty, and sales have grown steadily over the past years. With the introduction of digital services, BBL becomes a full-service agency.

The synergistic value created by the new division is expected to result in a once-off increase in traditional sales of 40 units - over and above the normal 12% growth rate of advertising sales. Thereafter all BBL sales volumes are expected to grow at a rate

of 10% per year. (Note: This increase for 2021 must be based on 2020 sales, excluding the additional 40 units).

BBL expects to complete 60 digital projects in 2021, increasing by 18% every year thereafter. The average fee for a digital project is estimated to be R250 000. Traditional projects are achieving average revenue of R1,6 million per project.

BBL's historical revenue is as follows: