Case 2 - Other Financial Alternatives: 30 Points (LO4) A young entrepreneur founded a packaged beverage company in early 2022. Based on information gathered from consumers, the young entrepreneur plans to increase sales of packaged drinks in 2023 , by producing packaged drinks with new flavors. Revenue in 2022 is $500,000 and is expected to reach $1,500,000 in 2023 . Each bottled beverage will sell for $5, and the bottled beverage costs $2 per bottle to produce. Administrative costs including the young entrepreneur's salary, salary of one accountant and three clerks, are estimated at $200,000 and marketing costs such as posters, advertisements in local newspapers, are estimated at $350,000 in 2023 . Then, investment in special equipment and renovation of Warehouses accounts for $562,500 and $62,500 in inventory, which was done in 2022. Moreover, an additional $150,000 in equipment investment is expected to be needed in early 2023 to increase the production volume of their bottled beverage. Currently, the old machine is still capable of producing the targeted amount of bottled drinks, it's just that the machine has to work for 24 hours a day. Machinery depreciation costs are expected to be $75,000 and interest expenses are expected to be $18,000 in 2023 . The tax rate is expected to be 25 percent of taxable income. Questions: A. How much net profit, before any financing costs, is the venture expected to earn in 2023 ? What would be the net profit if sales reach $2,5 million? (10\%) B. How much net profit, after any financing costs, is the venture expected to earn in 2023 ? (5\%) C. If inventories are expected to turn over ten times a year (based on cost of goods sold), what will be the venture's average inventories balance next year if sales are $1.5 million? How much might the venture be able to borrow if a lender typically lends an amount equal to 50 percent of the average inventories balance? If the borrowing rate is 12 percent, how much dollar amount of interest would have to be paid on the loan? 10%) D. Assume that the account receivables for the end of the year is $150,000. Young entrepreneurs are considering factoring the receivables to raise cash to help finance your venture's growth. The factor imposes a 6 percent discount and changes an additional 1 percent for each expected ten-day average collection period thirty days. Estimate the dollar amount you would receive from the factor for your receivables if the average collection period were sixty days. (5\%)