Decision Time!

Choose one of the following questions: a. Provide your answer to the question. b. Provide analytical support for your conclusion. c. Explain how your analysis lead to your conclusion.

OPTION A:

If Tony and Suzie asked you to invest in their business by purchasing stock, how much (if any amount) would you be willing to invest?

OPTION B:

Would you be willing to make an installment loan to Great Adventures in the amount of $50,000? If so, how many years would you allow for repayment?

Required information

RWP121 (Static) Great Adventures Continuing Case

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[The following information applies to the questions displayed below.]

Income statement and balance sheet data for Great Adventures, Incorporated, are provided below.

GREAT ADVENTURES, INCORPORATED
Income Statement
For the Year Ended December 31, 2025
Net sales revenues		$ 164,150
Interest revenue		120
Expenses:
Cost of goods sold	$ 38,500
Operating expenses	51,400
Depreciation expense	17,250
Interest expense	6,785
Income tax expense	14,500
Total expenses		128,435
Net income		$ 35,835

GREAT ADVENTURES, INCORPORATED
Balance Sheets
December 31, 2025 and 2024
	2025	2024
Assets
Current assets:
Cash	$ 180,568	$ 64,500
Accounts receivable	47,600	0
Inventory	7,000	0
Other current assets	900	4,500
Long-term assets:
Land	500,000	0
Buildings	800,000	0
Equipment	62,000	40,000
Accumulated depreciation	(25,250)	(8,000)
Total assets	$ 1,572,818	$ 101,000
Liabilities and Stockholders Equity
Current liabilities:
Accounts payable	$ 20,800	$ 2,800
Interest payable	750	750
Income tax payable	14,500	14,000
Other current liabilities	21,000	0
Notes payable (current)	48,014	0
Notes payable (long-term)	475,869	30,000
Stockholders equity:
Common stock	120,000	20,000
Paid-in capital	904,000	0
Retained earnings	57,885	33,450
Treasury stock	(90,000)	0
Total liabilities and stockholders equity	$ 1,572,818	$ 101,000

As you can tell from the financial statements, 2025 was an especially busy year. Tony and Suzie were able to use the money received from borrowing and the issuance of stock to buy land and begin construction of cabins, dining facilities, ropes course, and the outdoor swimming pool. They even put in a baby pool to celebrate the birth of their first child.