Eight years ago. Re] Hapi launched Hapi's Petting Zoo 8- Cafe {Hapi's}. Hapi's is a not for-profit zoo located in the Annapolis 'v'alley in Nova Scotia. It is a place where people can interact with various animals1 including sheep1 guinea pigs, ponies1 alpacas. chickens1 cattle. dogs1 pigs, miniature donkeys1 monkeys. and kangaroos. Admission to the zoo is by donation. There is an adjoining cafe where customers can purchase treats, which helps offset some of the costs of the zoo. The cafe focuses on vegan and glutem free treats to support the zoo's kwe of animals and provide dietary options for all. Hapi's is open Thursday to Sunday yeanround1 including holidays1 which he has found is better for the animals' well-being than being open seven days a week in the summer and closing over the winter. Customers frequently praise Ra] for providing a unique, family-friendly experience. and have rated Hapi's one of Nova Scotia's top 1t} attractions on multiple tourism websites. Hapi's would have been operating at a net decit since inception had it not been for an annual government grant of $1D.Dt}{l per year which is due to expire in two years and cannot be renewed. There are no similar grants. so Ra] is faced with a dilemma: find a way to make Hapi's self-sustaining and without debt or shut it down. Ra] has recently been approached by Petzy, a commercial petting zoo that is looking to expand its operations. Petzy would like to take over operations of the petting zoo. while the cafe portion of the business would continue to be operated by Ra]. Pelzy is a for- prot organization that incorporated 12 years ago. It started with lust one location but now has petting zoos throughout Western and Central Ganada. and it is looking toward Eastem anada. Fetzy offers monthly specials. such as two-for-one admission and free admission for children on Tuesdays. Brand awareness is high due to its catchy. 'BDS- style radio jingle that plays persistently on national radio stations durhg the morning commute. The company prides itself on the fact that no matter which Fetzy hcation people visit. they will get a consistent experience. An alternative would be for Ra] to change the current operations of the zoo and start charging admission. He doesnt like this idea. as he wants the zoo to be accessible to all. but he would consider it It It allowed him to maintain the see. You. CPA. work for a government department that provides strategy support for not-for protit organisations. You are preparing to meet with He] next week. select financial Information Is included in the Appendix. Task #2 Currently, the zoo sees 40,000 visitors a year. Of this, approximately 22,000 are children. If admission is charged, Raj would like to offer a 50% discounted rate to children. There will be an initial fixed cost of $2,000 for a cash register and turnstile. Raj anticipates that charging admission will cause a 25% decline in visitors to both the zoo and the cafe in the first year but that this will rebound the following year and remain stable. He does not think this will result in any savings on operational costs. He would prefer to not change the dates he is open, as he finds the animals do best with a cycle of busy days and quiet days year-round as opposed to constant visitors in the summer and then no visitors for the rest of the year. If Raj continues to operate the zoo, he needs to understand how much he would have to charge in order to break-even over a five-year period. Ignore any time value of money. Your response should be no longer than half a page, excluding any Excel files. Task #3 If Petzy were to purchase the zoo, it would be open seven days a week but only from April 1 to November 30. Raj would retain the cafe and would open it on the same schedule as that of the zoo in order to benefit from the zoo's business. He expects to see an increase in revenue similar to the increase in the number of days of operations. In addition to this expected revenue increase, Raj expects an increased number of daily visitors to the zoo under the Petzy brand. As a result, he expects his cafe's daily salesshould increase by 40% in the first year, 20% in the second year, and an additional 10% in year 3. Sales should remain steady after that. He would like to know if it makes sense to continue operating the cafe from a financial perspective. Assume the cafe continues to operate as a not-for-profit. Your response should be no longer than half a page, excluding any Excel files. Task #4 Petzy has offered Raj a lump sum to purchase the petting zoo. Raj is satisfied with the amount of the offer, but he is still unsure if it is the right decision. Provide an analysis of the two alternatives. Assume that if Raj does not sell the zoo he will break even by charging admission. Provide a supported overall recommendation to Raj on how to proceed. Your response should be no longer than two pages, excluding any Excel files.Appendix Hapi's nancial information Fading zoo Cat's Total Revenue - operations 0 - $ 00,000 $ 00.000 Revenue - donations 254.000 - 254.000 Revenue grant # 100.000 100.000 Cost of goods sold a {45.000} {45.000} Gross margin 254.000 135.000 300.000 Animal maintenance 120.000 # 120.000 Repairs and maintenance [Note 1] 20.000 20.000 40.000 Utilities {Note 1} 12.00::- 12,000 24.000 Wages (Note 2] 50.000 00.000 120.000 Rent [Note 3} 30.000 30.000 T2.000 Office supplies [Note 4} 2.000 2.000 4.000 Excess {deficit} of $ {51000} $ 5.000 $ 0 [EVE-DUES [WET BIPBI'IBIE'B Ra] mentions that a number of the expenses are split 50i50 on the internal statement. as in the end it is all Hapi's financials and he doesn't want to spend a lot of time tracking each expense as either the petting zoo or cafe. He knows it isn't a perfect approach. but he just bolts at the total column anyways. Note 1: Actual maintenance and utilities Is 00% for the petting zoo and 10% for the cafe. Ra] expects that if the cafe adjusts to Petzy's hours of operations. and opens for more days during the year. then utilities will increase by 15%. but maintenance costs will remain the same. Note 2: Wages during operating hours are for three employees two for the zoo and one for the cafe. All employees are paid equally. Note 3: The petting zoo and cafe have two separate lease agreements. The petting zoo Is $00,000 which is renewed each year and not expemed to increase whereas the cafe Is 012.000 annually with eight years remaining on the lease term. Note 4: Rs] believes the cities supplies are split approximately 25% for the zoo and 25% for the cafe