Extra Credit Assignment due 8/17/19 Ben Francis has decided to start Internet business selling quality workout gear in the upcoming year. He believes that his products are innovative and tending well and is seeking a business loan. Therefore, Ben is in the process of putting together a business plan.. Ben must include forecasted financial statements for 5 years. The financial statements to be included are the Income Statement, the Balance Sheet and the Cash Flow statement. Forecasting Assumptions: First year sales are projected to be $50,000 and grow/decline at the following rates: Year 1- year 2 +2% Year2 -year 3-4% Year 3- year 4+10% Year 4 -year 5 +5% Cost of sales are projected based on percentage of revenue as follows: Year 1 - Year 2 45% Year 2- Year 3 56% Year 3 -Year 4 42% Year 4 -Year 5 42% Advertising expenses are projected to be 3% of each year's projected revenue. Ben will outsource the creation and maintenance of his proprietary website with an outsourcing contract starting at $5,000 in year 1 and a 3% escalation clause each year. A part-time assistant will be hired starting on day one /year one for $20,000 per year. Office rent is a flat rate of $1,500 per month under a five-year lease agreement with no escalation clause for the duration of the lease. Utilities for the rented office space are estimated to be $250 per month. The office space to be rented is unfurnished. The company will purchase $8000 worth of furniture and fixtures at start of year 1. Furniture and Fixtures will have a useful life of 15 years. The company will also purchase some computers and office equipment for $10,000 starting year 1. The office equipment will have useful life of 5 years. Both the furniture and equipment will be depreciated on straight line base, assuming zero salvage for calculation. A 5-year bank loan will be negotiated for $75000. The estimated interest rate is 2% simple interest and will be paid back in $15,000 instalments starting in year 2. Interest is due at the end of each year and paid in January of the following. Ben will invest $10,000 of her own money to start the business. This $10,000 investment of capital is also the beginning bank balance of year 1. The tax rate is 25%. Taxes for the year just ended are paid in the first quarter of the following year. At the end of year2, the company will purchase insurance policy to help cover the business. The policy has a term of 3 years and coverage starts at beginning of year 3. The policy costs $5,000. Students are to construct a set of forecasted financial statements for start-up business for 5 years. Forecasted financial statements to include: Income Statement, Balance Sheet, Statement of Cash flows and Ratios.

Additional information:

You must use given Excel template

The three financial statements are interconnected.

The shaded areas are for data input. Use formulas to calculate subtotals on the Cash Flow Statement.

On each tab there is an area to keep track of various assumptions.