Fred Franks is an aspiring entrepreneur. His dream is to open a restaurant that deep-fries everything. Deep-fried Twinkies, deep-fried hotdogs, and deep-fried salads were just some of the dishes he wanted to serve. Always a marketing genius, Fred wanted to call his restaurant TGI Fry-Days. He recognized another company was called TGI Fridays, so he made sure to have a very good (and expensive) lawyer.

Fred had $ 100,000 in his bank account, so in order to start TGI Fry-Days, he needed to borrow money. His bank asked for a full business plan with projected startup costs, pro forma income statement, and pro forma cash flow statement (no pro forma balance sheet needed).

1. Complete all the financial statements for Fred (do not need a balance sheet).

2. How much income will Fred make in Y1?

3. What advice do you have for Fred about his summer vacation?

4. Freds favorite two days of the year are Valentines Day (M2) and Halloween (M10). He wants to hold a special promotion on either Valentines or Halloween. If he has a Valentines Event, he estimates it would cost $ 3,000 in additional marketing and $ 5,000 in new signage, furniture, and equipment. If he has a Halloween Event, he estimates it would cost $ 5,000 in additional marketing and $ 10,000 in new signage, furniture, and equipment. Neither event would bring in more revenue, but Fred doesnt care because he loves both holidays. Which event do you recommend? Valentines Day, Halloween, or both? Why.

PLEASE ANSWER QUESTIONS 2-4

Fred's Available Sources of Financing Personal Bank Account: $ 100,000 Bank Loan: $ 150,000 Interest on the Loan $1.500 per month Things Fred Would Need. Kitchen Equipment Furniture & Fixtures Signage Working Capital Cost S 150,000 S 80,000 S 10,000 $ 10,000 Useful Life 20 years 20 years 10 years Revenue Forecast MI: $30,000 M2 & M3: S40,000 per month M4 - M6: $55,000 per month M7: $20,000 (taking a summer vacation with his family) M8 - M12: $60,000 per month Variable Expenses Wages: 25% of Revenues Cost of Goods Sold (food): 33% of Revenues Marketing S2000 a month, except November & December (Holiday Season): 54,000 a month No Taxes. Consider TGI Frydays to be an LLC Other Expenses (alphabetical order) G&A $ 5.000 a month Insurance S 500 a month Legal Fees $ 2.000 a month, but paid as $6,000 every 3 months (starting M1) Rent $ 6,000 a month Cash Flow Statement Particulars MI M2 M3 M4 M5 M6 M7 M8 MIO MI MIZ Operating Activity Revenue FX 0000 40000 55000 55000 55000 20000 60000 60000 60000 60000 60000 Total Inflow of 20000 40000 40000 55000 55000 55000 20000 000 60000 cash Wages 7500 10000 10000 13750 13750 13750 5000 15000 15000 15000 15000 15000 25% Cost of Good Sold 9900 13200 13200 18:50 18:50 18150 6600 19800 19600 19800 19800 19800 Marketing 2000 2000 2000 2000 2000 2000 2000 2000 2000 2006 4000 4000 Other Expense (I&A SOLO 5000 5001 5000 5000 5000 5000 5000 5000 5000 5000 5000 Insurance 500 500 500 500 500 500 500 500 500 500 500 500 Legal Fees 0 60000 0 60000 50000 Real 6000 6000 6000 6000 6000 6000 6000 6000 6000 Total outflow of 3690036700 24700 31400 45000 4540031100 830 830 S4300 50300 50.300 cash Net cash flow from 200 3300 3300 3600.000 - 11:00 11700 1700 5700 9700 9700 operating Activity 0 Investing Activity Purbase of Assets and 2500000 D W. Capital Net cash flow from -2500000 Investing Activity 0 0 Financing Activity New Funds 250000 Interest on 1500-1560-1500 1500 - 1500-1500-1500 1500 - 1500 1500 - 4500 4500 loan Net cash flew from Financing 248500-1500-1500-1500-1500-1500-1500 1500-1500 1500-1500-1500 Activity Net cash flow -&400 1800 1800 2100 8100 8100 -12600 10200 1020042005200 8200 opening 0 -8400-6600-4800-2700 5400 13500 900 11100 21300 25500 33700 cash Closing -X100 -6660-400-2700 5400 1350000 11100 21300 25500 3370041900