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GetMyFood, Inc. has developed an application for cell phones aimed toward consumers who live in more rural areas where there are few delivery options for

GetMyFood, Inc. has developed an application for cell phones aimed toward consumers who live in more rural areas where there are few delivery options for take-out food. The app connects local taxi drivers with the larger restaurant food delivery services in nearby areas to extend the range of home meal delivery service.

The company expects to generate revenues of $2000 (figures in thousands) in the first year (2020) with a general costs of services sold of $1200 (figures in thousands.) The company expects to see a sharp increase in the revenues earned after the first year as the new service gains recognition but believes that the life-cycle of the product will be relatively short as market research has shown that the business model will be most successful in areas that are more rural but still relatively close to larger population centers. Given the general demographic trend in population growth, the company believes that their target market will diminish over time as more standard delivery services become available.

The company estimates the following growth rate for revenue, costs, and SG&A over the next five years:

Growth Rate for Selected Items

2019

2020

2021

2022

2023

2024

Revenue Growth

5%

15%

10%

3%

CGS

3%

4%

2%

2%

SG&A (% of Revenue)

28%

27%

26%

24%

20%

The have also forecasted the following items for working capital:

Selected Projections (Figures in thousands)

2019

2020

2021

2022

2023

2024

A/R

300

325

310

295

250

A/P

200

230

240

220

210

Inventory

50

65

40

30

20

Depreciation

100

113

117

104

115

Taxes are assumed to be 34% per year. The initial outlay for software development is estimated to be $1000.

You have been hired as a financial consultant to determine the estimated free cash flows to the firm for GetMyFood, Inc.

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