Part 8 - CASH FLOW FORECAST NOTES INSTRUCTIONS July Aug Sept Oct Calculate the cash flow forecast for the first 4 months of Opening bank balance at bank $10,000.00 $154,064.58 5294,679.16 $352,168.74 trading by filling in the table. Apart from the opening & closing bank balances and the Capital Inflows (borrowed or invested?) $500,000.00 Fund to run the business over the first 4 months BAS & Company Tax calculations , the other information Revenue Inflows $390,000.00 $305,000.00 $117,000.00 Monthly payments from all projects A, B, C & D already exists. Operating outflows NOTE: Ensure to refer to previous worksheets when Project A $208,725.00 $107,525.00 50.00 50.00 Automatically prefill's needed to help with information. Some of the Project B 60.00 5108,750.00 $108,750.00 50.00 Monthly job expenses - direct costs only Information should already be completed for you or will Project C $0.00 50.00 $101,250.00 $202,500.00 Automatically prefills automatically prefill as you add information. Project D $0.00 $0.00 50.00 SO.00 Automatically prefills Overheads (excludes depreciation & asset loan payments) $45,127.08 $31,027.08 $35,427.08 $32,127.08 Note monthly, quarterly and one off expense timings BAS Inc Company Tax (provisional estimate $14,803.04 Paid quarterly - see Qi & Q2 below Capital Outflows (asset purchases) $100,000.00 Cash outlay for purchases Capital Outflows (Loan repayments) $2,083.34 $2,083.34 62,083.34 52,083.34 For asset and capital equipment financing Closing bank balance at bank $154,064.58 5294,679.16 $352,168.74 $217,655.28 All salary costs for GST calc only $57,500.01 $57,500.01 $57,500.01 Non cash flow Item (GST only) - DC & Overhead Q1) Base company tax on 27.5%% of annual profits paid quarterly; Show calculation. $3,336.16 Q2) GST = Revenues * 10%% - [DC + Overheads (above) + loan repayments - all payroll expenses) * 10% show calculation. $11,465.88 Revenue Costs 5695,000 580,331.23 $11,465.88Major Project Task 2.2 - Part 1: Funding Analysis Debt Financing: In the table below, answer the following questions related to debt financing. Q1. Referring to your Budget and Financial Plans Workbook (Part 8) ,ow much capital do you need to acquire to fund the first 4 months? If no funding is required ask your trainer to provide a target amount. Q2. Assuming a borrowing term of 3 years at a rate of 7.0% p.a., what is the estimated interest cost over 3 years? (You can use simple interest or use on-line tool to calculate compound interest) Q3. What is the after tax cost of finance using the 27.5% p.a. company tax rate? Q4. Including the capital repayments, what is the total amount to be repaid over 3 years?\fComment: Q1) Complete Q2) Incorrect for calculation of 3 yrs to the current amount. Q3) Incorrect - see feedback below Q4) Incorrect - this is based on physically paid, not with tax deductions (i.e. not after-tax) Q3 Feedback: The % rate is adjusted once you take each of the figures and complete the after-tax rate adjustment calculation. The company tax rate is 27.5%, the current (before-tax cost) interest rate is 7%. Take these figures and use the following formula: Before-tax cost of debt rate x (100% - incremental company tax rate) = After-tax cost of debt rate This provides you with an adjusted rate of interest to calculate the loan amount which incorporates the tax deduction estimate from the life of the loan.Major Project Task 2.2 - Part1: Funding Analysis Equity Financing: In the table below. answer the following questions related to equity financing. [3.11. If you wanted to attract an investor to purchase shares in your start-u p. you need to make an oer that is sufficiently attractive. Assuming the hurdle rate is 25% pa. or over 3 years a ?5% return on funds invested {HUI}. what is the amount to be repaid over three years? HiNT: it $100,000 is required to fund the business then investor is inciting for a return of $25,000 per year and $?5,000 over 3 years. 02. Assuming the company achieves its projected profit in the first year; what \"is of the business profit does this represent? Equity Financing Question No. Your Response 1 75,000 or 75% of the investment The rate after deducting the taxes. (e.g. 30% tax rate, therefore 70%) see below for further explanation. 1. Initial investment 100,000 Hurdle rate 25% 25,000 Minimum Return annual = 100,000 x 25% ROI required for 3 years 75% 75,000 Dividends for 3 years = 100,000 x 75% 2. Operating income (business profit) 100,000 Tax Expense (30%) (30,000) Income after taxes (bottom-line profit) 70,000 70% = 70,000/ 100,000 Rate or = 1 - 30%Comment: Q1) Complete - will accept, although this is supposed to be based on your $500,000 you have allocated in your major project Q2) Incorrect understanding. an equity lender is a private investor, i.e. they are becoming a business partner now taking ownership of 25% share of the business and requiring 25% return on profits each year. To the tax office these are classified as Dividend payments, these are not tax deductible. Be careful not to just think it is just about the monies, this is based on the percentage of the overall business. Take into account an equity lender is now a shareholder of the business, holding 25% of the capacity. They now require 25% of ROI payment. Before they are paid, this is equivalent to another 25% share until they are paid. This is because at this point in time there is no Goodwill and the current assets often are still neutralised by debts. The response for this is simple maths