Calculate Cashflow of the following;

Initial Investment:

1. Equipment Cost: $100,000 (depreciated over 5 years)
2. Marketing: $20,000
3. Inventory: $15,000

Total Initial Investment: $135,000

Annual Cash Flows:

Sales:

• Coffee: 100 cups/day in the 1st year, with a 20% increase each year for 2nd and 3rd years, and a 10% increase for 4th and 5th years.
• Sandwiches: 30 sandwiches/day at a constant rate.

Coffee Pricing: $6/cup

Sandwich Pricing: $9/sandwich

Variable Costs: 30% of the selling price

Labor Costs:

• 2 baristas and 2 customer service specialists
• $18/hour
• Owners expect 1 barista and 1 customer service specialist to work at a time.

Rent: $7,000/month

Accounts Payable: 20% of COGS

Inventory Maintenance: $15,000 (reclaimed at the end of 5 years)

Depreciation: Equipment cost spread over 5 years.

Now, let's calculate the annual cash flow for each year.

Year 1:

• Sales: Coffee (100 cups/day), Sandwiches (30 sandwiches/day)
• Revenue: (Coffee Price * Coffee Sales) + (Sandwich Price * Sandwich Sales)
• COGS: Variable Costs + Labor Costs + Rent + Accounts Payable + Inventory Maintenance
• Operating Profit: Revenue - COGS
• Depreciation
• Net Profit: Operating Profit - Depreciation

Years 2-5:

• Repeat the above calculations with increased sales for coffee.

End of Year 5:

• Reclaim Inventory and Pay Accounts Payable.