Contribution Margin and Price Decision 1) Please calculate your contribution margin and estimate how many noodles you need to sell to cover your xed costs in units and dollar? 2) Please use cost based approach to set your selling price, and compare your price against your competitors? Can you sell noodle at a cheaper price? (See menu of your competitors?) Budget A three years budget, starting from your estimated sales to project your costs of raw material, labor, overhead (assuming ination is minimal). 1) Create a projected CASH FLOW budget 2) Create a projected Income Statement and Balance Sheet 3) Research on the Federal and State Tax rate (Hotel Tax on service group?) 4) The rst year nancial statements (cash ow budget, income statement and balance sheet) must be prepared on a monthly basis. The second and the third year nancial statements can be prepared on a yearly basis. Project Evaluation Using the Operating Cash Flow (Net Income + Depreciation) to evaluate your project Net Present Value using a required rate of return of 10% (assuming cost of borrowing from a bank is lower than 10%). What is your total investment in year 0? What is your working capital requirement in each of the three years? What is your project net present value? Exit Strategy and Conclusion How fast you can exit your business or cut your loss? Based on what your cost analysis would you really start your business? Professional Writing and Presentation 1) Please create an Executive Summary, supported by your spreadsheet of cost analysis, of your project to convince potential investors to fund your start up. Executive summary is not a lll report. lfyou are submitting a report to the Board of Directors about your project, how would write it? I would say three to four pages is enough with professional business writing. a) What is the project? Doing what? b) How much capital you need? c) Prot or loss in rst, second or third year? d) NPV? e) What is your exit strategy? 1) Most important do you recommend starting the project? 2) Please present your business proposal with power points for 20 minutes with 10 minutes answering questions from your classmates