Consider the following case study information before answering the project assignment question

You have two good friends Nathan and Megan, they are both aged 27 and both work in a local call centre, they both work full time and earn 18,000 per annum.

They live in rented accommodation and have managed to minimise their personal debt commitments. They have a good credit record.

Nathan and Megan have saved on a regular basis for the past four years and have 6,000 in an instant access savings account and a stocks and shares ISA currently valued at 13,000 (September 2021)

It has always been their dream to run their own business and they have done a vast amount of research into potential business ventures in the local area.

Their favoured option is to develop an existing empty shop in the student area of Cardiff, it has been empty for the past 18 months and will require some maintenance and repair.

A survey of existing provision in the area has been completed and they firmly believe there is a lack of competition in this area of business.

They believe that they could open a coffee shop/delicatessen and have drawn up plans and a budget to develop the existing ground floor premises and purchase the necessary equipment and stock.

They are also considering as its a student area whether to have a small 2^nd hand book shop as part of the plan.

Nathan and Megan have asked you to consider investing in their project, they have offered you 30% of the first three years net profit in return for an investment of 30,000.

They have also offered you the opportunity to input into how the business is established and run.

Your initial investment lump sum will not be returned regardless of the business success or failure.

They have projected the following profit levels

2022/2023 17,500

2023/2024 63,750

2024/2025 95,000

Your investment will be used to pay for the alterations to the property that need to be undertaken before the new coffee shop is opened in January 2022

Consider your personal circumstances

You are aged 24 and work full time Admiral Insurance in the claims department. You have been there for 2years, you are a graduate in Business and Finance.

Your annual salary is 23,800.

At the moment you still live with your parents and pay them a small weekly amount equivalent to rent.

Ideally you would like to move out, but renting on your own would be too expensive at the moment, you estimate that a good quality obe bed flat would be approx. 650 per month

You have a number of credit cards, an overdraft and a personal loan taken out to buy your car.

At present your total unsecured debt totals 14,700.

Most months your income from wages and your outgoings leave you with little spare cash and you do not have any savings.

You readily admit that you could be much better in managing your finances.

You are about to inherit 35,000 from an elderly relative.

You have a number of choices to make;

1. Reduce your debt
2. Save or invest the money in relevant products
3. Invest in Nathan & Meganss business proposal
4. Donate the inheritance to a chosen charity
5. A combination of any number of the above

Question

Evaluate the pros and cons of each of the five above options.

Select the option you are going to choose as your preferred course of action from the list of 5 options above and fully justify your choice.

Your answer needs to include an evaluation of the possible returns from your choice, the potential costs and a discussion of the possible risks.