Please do NOT submit Excel files showing your computations. You need to type this project on MS word. Any other format will NOT be marked. Please follow closely the following guidelines in submitting this project: o Question 1: Summarize the indirect costs in a Table and show the final value. 10. 2) Using the sensitivity analysis mandates, perform the following analysis. Consider two scenarios: (1) an optimistic scenario, where you anticipate a 25% surge in the price of your final product in the first year and (2) a pessimistic scenario, where the price drops by 25% in the first year. Use the break-even formula as a percentage of capacity (Fahmy, 2019) to compute the break even quantity as a percentage of capacity. OBE(%), in each scenario and report your answer in the following table. Comment on your results. (Hint: when there is a change in the price of your final product, both your revenues and variable costs should change by the same percentage. The fixed cost, however, should remain fixed) Projected Year 1 Optimistic Scenario Pessimistic Scenario Total revenue Total variable cost Total fixed cost Q(% of capacity) TN: 1. 1 Background and mandates In this project, we intend to analyze the financial feasibility of opening a new small burger restaurant in downtown Victoria, British Columbia (BC). Burger restaurants are part of the fast-food industry. They are classified under limited-service cating places. Companies in this classification operate under conditions of monopolistic competition, that is, players compete with each other while acting as monopolists in their own segment. The monopoly power is justified by the player's competitive advantage, which could be a characteristic of the product or service, quality, taste, efficiency, or any other key aspect of the service provided. In this industry, the level of competition is high whereas the market concentration and the barriers to entry are low. According to Statistics Canada (2018), in BC, there are nearly 11,000 food and drinking places, and 41.2% of the places are limited service restaurants. This data validates the monopolistie competitive structure of the industry. We begin by estimating the market share of this new business. In 2019. the total revenue of limited- service restaurants in BC was CAD$5.07 billion (Statistics Canada, 2019). 27.7% of this total revenue is the market share of the major players in the industry (IbisWorld, 2019). Thus, the total revenue of small limited-service eating places for minor players, i.e., for businesses similar to ours, is approximately CAD$3.7 billion: $5.07 billion 72.3% = $ 3.7 billion. (1) According to Statistics Canada (2017), the total population in BC Is 4,648,055 and the total population in Victoria is 85.792. Thus, the ratio of the population of Victoria to BC is 85,792 4,648,055 * 100% = 1.85%. (2) Taking this ratio and applying it to the total revenue of small limited-service eating places for minor players in BC, one can project the total revenue of small limited-service restaurants in Victoria to be approximately CADS 68.45 million $3.7 billion x 1.85% = $68.45 million. (3) Now, since we have estimated the total revenue for this industry in Victoria, our next task is to estimate the total revenue of one small burger restaurant in the city. In Vancouver Island, the number of small food and drinking places per 100.000 persones is 202 (Statistics Canada, 2017b). Thus, in Vietoria, with a total population of 85,792, the number of small food and drinking places ought to be 173 restaurants: that is, 202 restaurants 85,792 100,000 = 173 restaurants (4) This number, however, includes all types of restaurants in the region. But, according to Statistics Canada (2018), 41.2% of eating places in BC are limited-service restaurants. Thus, the estimated number of small limited-service restaurants in Victoria is approximately 71 restaurants 173 restaurants x 41.26 71 restaurants. (5) Next, we seek to narrow this number down to account for burger restaurants only. A quick Yellow Pages search yields 24 burger restaurants in Victoria; 6 are major players and 18 are small players. Thus, 18/71 25% of small fast-food places in Victoria are burger restaurants. Since the total revente of small limited- service restaurants in Victoria was found to be approximately CADS 68.45 million (see eq. (3)), then 25% of that revente ought to be a good estimate of the total revenue of small burger restaurants in Victoria. This gives approximately CAD$17.11 million 868.45 million x 0.25 = $17.11 million (6) Assimine torxhly that the 18 small cocisting lineses plus the new potential entrant (our business) will have qual share the annual revme of our new small burgerrestart in Victorin is therefore, estimated to be approximately CAD$900.626 $17.11 million 8900,536. (7) 18+1 Now, we turn to the five steps of financial evaluations in Fahamy (2019). In the following sections, we state the manulates that will be used in the computations and analyses of every step 1.1 Revenues and costs mandates The total revenue for the first year of operation is estimated to be CAD9900,626 (well, Revmes are to be projected one youts operations. . The direct and indirect costs of operations for the first year are estimated based on the statistics in this World (2019) Industrial report on fast-food restaurants in Canada. The only exceptions are the calculations of rent and administration expens. - Direct costs include purchases of food and beverages and wages. For the first year, purchases of food and beverages and wages are estima to account for 36.7% and 30.2% of the total annual revenue that in projected in eq (7). - Indirect costs include rent, utilities, marketing administration, and other costs. The following are the mandates for estimating each of the previous categories Rent: The wenge floor space for small restaurants in Victoria is calculated by using an online tool from Map Developers (2020). The tool shows that small restaurants like Fat Burger und Tacotino have an average size of 1300 square feet. Our store, which will be one of the small-scale burger centres, is assumed to take the same space. According to the Canadian Real Estate Association's website www.realtor.ca, the commercial retail property rates for les ranges between a minimum of CADS16 and a maximum of CAD$40 per te foot in downtow. Taking the grometric mean, we estimate approximately CAD$25.3 lease per are foot V16 X 40 - 253 Thus, the estimated total rent cost in the first year is $25,3 * 1.300 square feet = 5x2,500 19) Square foot Utilities: Fast food restaurants spend 2.5% of their revenues on services such as gas, de tricity and the internet (This World 2019) Marketing. The projected expenditures convertising represent 2.8% of total revenue (Ibis World 2019). Administration: We are planning to hire one restaurant manager at the average hourly rate of CADIS, and the expected total working hours per week for this position is 18 hours. We 52 weeks per year Other Costs According to This World (2019), organizations in the fast-food industry alio incur various other expenses, which include legal and accounting fees, administrative expeta, insurance and repairs and maintenance, and these costs add up to 15% of total revenue. 1.2 Capital mandates In this section, we discuss the mandates that we will use to compute the total investment cost (TIC), or / for short Recall that TIC"1=FC + NWC wbere FC is fixed capital, which is the sum of fixed investments and peoproduction capital costs, and NWC is the networking capital Fixed Capital consists of fixed investments and pre-production capital costs. The fixed invest ments in our project consists of 1 categorier tortion and design of the property, Kitchen equipment, dinining are equipment, and a retail point of sale (POS) system. The nation and design of the property costs a minimum of CADSS per square foot and a maximum of CAD 286) prefoot Buil. 2017). The geometric mean is SCAD145 per square foot approximately, that V5 x 256 $105 Totalrenovation and design of the property is therefore $145 persone foot x 1300 feet - $188.com The projections of all other items in fixed investments are explained in Appendix A. Below is a smmary of the fixed investments cast Fixed luvestits Renovation and design of the property $185,600 Kitchen area equipe 357.000 Diming area equipment $2,500 POS hawdware and software 35,000 Total 5253,000 Pre-production capital costs include expenditures during registration and formation, produse for preparatory studies and pre-production expedites. For opening a small buget rest in BC wewed several licences and registration fees, ex Limited Liability Company LLC registi, dectric permittipal business lietas, and other pre-production expenses. The total of all these expenditures is CAD$13, 174 (see Appendix B). As for the estimation of the net working capital, we entertain the following options to the tail business, the main paytant methods we cu debit and credit cards According to a reported Ir the Bank of Canada (Henry et al. 2018), approximately 6% of the total value of transactions are pail by credit card in BC We will use this estimate to project the percentage of total evening at is paid by credit cards. The value is to be talon as the annual cost of operations in the working capital calculatiotes. Credit card payment create accounts receivables, which cover the map between products and receiving funds from the bank. The coverage period for credit card paymun is between two or three business days. In this project, we will assume 3 days the coverage period for control We will entertain the umption that the fast-food industry follows the male-to-eder production strategy This implies that companies in this industry do not hold story and therefore, the capitalisteeded to finance inventory of final products. As for the inventory of row material base most of the food items are perishable goods, we will use a week coverage period for investory of raw materials. The annual cost of raw materials in med to be 30% of totale. Finally, we wth coverage for accounts payable 1.3 Financial structure mandates Using the notation in Section 5. Chapter 8 in Fahmy (2019), we have the following variables pertaining to the financial structure of the project: 1 - total investuent cost (TIC). = return on investment L = loan R = repayment of the lan, = luterest rate on borowing, * = mber of The following are the options used to compute the optimal capital cure. The rate our estimated by taking the average rate of return on investors of two similar ut from the Toronto Stock Exchange (TSX); namely, MTY Food Group Inc. and Recipe Unlimited Corp. The return on investment of MTY and Recipe are 9.75% and 9.89% respectively. Therefore, the return on investment for our business is estimated to be r = 9.8%. Because our business is eligible to participate in the Canada Small Business Financing Program, the maximum interest rate on borrowing is the bank's prime rate plus 3% (Government of Canada, 2017). Currently, as per the Bank of Canada statistics, the average prime rate is 3.95%. Therefore, the interest on borrowing can be anywhere in the range of 3.95% to 6.95%. Taking the geometric mean of these bounds, we estimate is = 5.24%. We assume that the total investment cost, I will be financed via debt (loan) and equity. The loan is assumed to be paid over 5 installments. 1.4 Financial evaluation mandates The following are the mandates used to compute the net cash flow (NCF): The project's operations is assumed to continue after the 5th year and, thus, no residual value will be estimated . There will not be any change in investments over the life time of the project. The corporate tax for small businesses in BC is 11% (Government of Canada, 2019). Revenues are expected to grow by 2.7% per year (Statistics Canada, 2020) Purchases and indirect costs are expected to grow by the inflation rate in Canada, which, according to the Bank of Canada's recent statistics, is 1.9%. . Again, according to the Bank of Canada's forecasts, wages are expected to grow by 2.8%. Thus, we will assume that direct costs will grow by the same rate. 1.5 Weighted average cost of capital (WACC) mandates The beta coefficient of a similar asset (MTY) in the same risk class is found to be 8 = 0.66. We will use this coefficient to represent the systematic risk of our business. Assume the country risk 7 = 0.02. The interest on deposit, id, is estimated by taking the geometric mean of the minimum rate of 1.1% and the maximum rate of 2% as per the recent statistics posted by the Bank of Canada. Thus, id=V1.1 2 = 1.48%. 1.6 Sensitivity analysis mandates The last step of financial evaluation is to perform a sensitivity analysis to assess the risk of investing in this project. In this analysis, we use the break-even formula as a percentage of capacity to compute the break even quantity Que in various scenarios. The formulas, as given in Fahmy (2019), is QBE(% of capacity) Fixed production costs sales revenue - variable production costs where, in our case, the fixed production costs include rent, wages, salaries, marketing, administration ex- penses, and other costs. The variable production costs include purchases of food and beverages and utilities. 3 Appendix A: Fixed investments costs Fixed Investments Renovation and design of the properly $188,300 Kitchen Art 357.000 Dinning at $3.000 POS riware and software $5,000 Total $250,000 Renovation and design of the property Build It. 2017) MONTCAD per refoot Max (CAD) per refoot Geometric me SNS $230 $145 Total cost for 1,000 square foot $146 x 1300 $18.600 Kitchen area equipment Webstrant Store 20.30. Zanducao, 2020 Equipo Cot SCAD) Unit Toal Cost (SCAD Free 34.599 1 $1,699 Cooler 83.99 1 $3,000 Preptable que $2,573 1 $2,973 Dishwasher $3,909 ! Washing machine 8945 1 $9-15 Grill and equipment $5,500 $11,000 Ventilation system for grill $1,100 $2.200 Ban stocker ! S560 Bun toaster ! $1699 Soda machine and equipment $8,500 1 $8,00 Assembly station $3.299 + $3.290 Packing table $450 1 Fryer equips $1,900 ! $1.990 Microwave $1.000 ! $1,000 Veil. cutlery, and dish ware 39.709 $9.769 Total kitchen area and equipment $57,000 $1699 4 Appendix B: Pre-production capital costs Pre-production capital costs Type Cost (CAD) Source A: Expenditures during registration $1.425 Bislim $100 Bizpal (1) Registration LLC $350 Bizpal (td.) Electric permit $300 Bild) Inter midpal business license $100 Bizpal(.d.) Sign permit Bipal (td.) Food primary $175 Bizplud) B: Expenditures on preparatory studies $2,000 Consultation for $2.000 Butterfield Law (2018) C: Pre-production expenditures $9,708:57 Salary (bring employees 5 days before production) 53.172.05 Rent (1 month rent + Inwarance deposit) S6036.09 Travel ex NA Training cont NA Total pre-production capital cost A+B+C $13, 174 $100 Please do NOT submit Excel files showing your computations. You need to type this project on MS word. Any other format will NOT be marked. Please follow closely the following guidelines in submitting this project: o Question 1: Summarize the indirect costs in a Table and show the final value. 10. 2) Using the sensitivity analysis mandates, perform the following analysis. Consider two scenarios: (1) an optimistic scenario, where you anticipate a 25% surge in the price of your final product in the first year and (2) a pessimistic scenario, where the price drops by 25% in the first year. Use the break-even formula as a percentage of capacity (Fahmy, 2019) to compute the break even quantity as a percentage of capacity. OBE(%), in each scenario and report your answer in the following table. Comment on your results. (Hint: when there is a change in the price of your final product, both your revenues and variable costs should change by the same percentage. The fixed cost, however, should remain fixed) Projected Year 1 Optimistic Scenario Pessimistic Scenario Total revenue Total variable cost Total fixed cost Q(% of capacity) TN: 1. 1 Background and mandates In this project, we intend to analyze the financial feasibility of opening a new small burger restaurant in downtown Victoria, British Columbia (BC). Burger restaurants are part of the fast-food industry. They are classified under limited-service cating places. Companies in this classification operate under conditions of monopolistic competition, that is, players compete with each other while acting as monopolists in their own segment. The monopoly power is justified by the player's competitive advantage, which could be a characteristic of the product or service, quality, taste, efficiency, or any other key aspect of the service provided. In this industry, the level of competition is high whereas the market concentration and the barriers to entry are low. According to Statistics Canada (2018), in BC, there are nearly 11,000 food and drinking places, and 41.2% of the places are limited service restaurants. This data validates the monopolistie competitive structure of the industry. We begin by estimating the market share of this new business. In 2019. the total revenue of limited- service restaurants in BC was CAD$5.07 billion (Statistics Canada, 2019). 27.7% of this total revenue is the market share of the major players in the industry (IbisWorld, 2019). Thus, the total revenue of small limited-service eating places for minor players, i.e., for businesses similar to ours, is approximately CAD$3.7 billion: $5.07 billion 72.3% = $ 3.7 billion. (1) According to Statistics Canada (2017), the total population in BC Is 4,648,055 and the total population in Victoria is 85.792. Thus, the ratio of the population of Victoria to BC is 85,792 4,648,055 * 100% = 1.85%. (2) Taking this ratio and applying it to the total revenue of small limited-service eating places for minor players in BC, one can project the total revenue of small limited-service restaurants in Victoria to be approximately CADS 68.45 million $3.7 billion x 1.85% = $68.45 million. (3) Now, since we have estimated the total revenue for this industry in Victoria, our next task is to estimate the total revenue of one small burger restaurant in the city. In Vancouver Island, the number of small food and drinking places per 100.000 persones is 202 (Statistics Canada, 2017b). Thus, in Vietoria, with a total population of 85,792, the number of small food and drinking places ought to be 173 restaurants: that is, 202 restaurants 85,792 100,000 = 173 restaurants (4) This number, however, includes all types of restaurants in the region. But, according to Statistics Canada (2018), 41.2% of eating places in BC are limited-service restaurants. Thus, the estimated number of small limited-service restaurants in Victoria is approximately 71 restaurants 173 restaurants x 41.26 71 restaurants. (5) Next, we seek to narrow this number down to account for burger restaurants only. A quick Yellow Pages search yields 24 burger restaurants in Victoria; 6 are major players and 18 are small players. Thus, 18/71 25% of small fast-food places in Victoria are burger restaurants. Since the total revente of small limited- service restaurants in Victoria was found to be approximately CADS 68.45 million (see eq. (3)), then 25% of that revente ought to be a good estimate of the total revenue of small burger restaurants in Victoria. This gives approximately CAD$17.11 million 868.45 million x 0.25 = $17.11 million (6) Assimine torxhly that the 18 small cocisting lineses plus the new potential entrant (our business) will have qual share the annual revme of our new small burgerrestart in Victorin is therefore, estimated to be approximately CAD$900.626 $17.11 million 8900,536. (7) 18+1 Now, we turn to the five steps of financial evaluations in Fahamy (2019). In the following sections, we state the manulates that will be used in the computations and analyses of every step 1.1 Revenues and costs mandates The total revenue for the first year of operation is estimated to be CAD9900,626 (well, Revmes are to be projected one youts operations. . The direct and indirect costs of operations for the first year are estimated based on the statistics in this World (2019) Industrial report on fast-food restaurants in Canada. The only exceptions are the calculations of rent and administration expens. - Direct costs include purchases of food and beverages and wages. For the first year, purchases of food and beverages and wages are estima to account for 36.7% and 30.2% of the total annual revenue that in projected in eq (7). - Indirect costs include rent, utilities, marketing administration, and other costs. The following are the mandates for estimating each of the previous categories Rent: The wenge floor space for small restaurants in Victoria is calculated by using an online tool from Map Developers (2020). The tool shows that small restaurants like Fat Burger und Tacotino have an average size of 1300 square feet. Our store, which will be one of the small-scale burger centres, is assumed to take the same space. According to the Canadian Real Estate Association's website www.realtor.ca, the commercial retail property rates for les ranges between a minimum of CADS16 and a maximum of CAD$40 per te foot in downtow. Taking the grometric mean, we estimate approximately CAD$25.3 lease per are foot V16 X 40 - 253 Thus, the estimated total rent cost in the first year is $25,3 * 1.300 square feet = 5x2,500 19) Square foot Utilities: Fast food restaurants spend 2.5% of their revenues on services such as gas, de tricity and the internet (This World 2019) Marketing. The projected expenditures convertising represent 2.8% of total revenue (Ibis World 2019). Administration: We are planning to hire one restaurant manager at the average hourly rate of CADIS, and the expected total working hours per week for this position is 18 hours. We 52 weeks per year Other Costs According to This World (2019), organizations in the fast-food industry alio incur various other expenses, which include legal and accounting fees, administrative expeta, insurance and repairs and maintenance, and these costs add up to 15% of total revenue. 1.2 Capital mandates In this section, we discuss the mandates that we will use to compute the total investment cost (TIC), or / for short Recall that TIC"1=FC + NWC wbere FC is fixed capital, which is the sum of fixed investments and peoproduction capital costs, and NWC is the networking capital Fixed Capital consists of fixed investments and pre-production capital costs. The fixed invest ments in our project consists of 1 categorier tortion and design of the property, Kitchen equipment, dinining are equipment, and a retail point of sale (POS) system. The nation and design of the property costs a minimum of CADSS per square foot and a maximum of CAD 286) prefoot Buil. 2017). The geometric mean is SCAD145 per square foot approximately, that V5 x 256 $105 Totalrenovation and design of the property is therefore $145 persone foot x 1300 feet - $188.com The projections of all other items in fixed investments are explained in Appendix A. Below is a smmary of the fixed investments cast Fixed luvestits Renovation and design of the property $185,600 Kitchen area equipe 357.000 Diming area equipment $2,500 POS hawdware and software 35,000 Total 5253,000 Pre-production capital costs include expenditures during registration and formation, produse for preparatory studies and pre-production expedites. For opening a small buget rest in BC wewed several licences and registration fees, ex Limited Liability Company LLC registi, dectric permittipal business lietas, and other pre-production expenses. The total of all these expenditures is CAD$13, 174 (see Appendix B). As for the estimation of the net working capital, we entertain the following options to the tail business, the main paytant methods we cu debit and credit cards According to a reported Ir the Bank of Canada (Henry et al. 2018), approximately 6% of the total value of transactions are pail by credit card in BC We will use this estimate to project the percentage of total evening at is paid by credit cards. The value is to be talon as the annual cost of operations in the working capital calculatiotes. Credit card payment create accounts receivables, which cover the map between products and receiving funds from the bank. The coverage period for credit card paymun is between two or three business days. In this project, we will assume 3 days the coverage period for control We will entertain the umption that the fast-food industry follows the male-to-eder production strategy This implies that companies in this industry do not hold story and therefore, the capitalisteeded to finance inventory of final products. As for the inventory of row material base most of the food items are perishable goods, we will use a week coverage period for investory of raw materials. The annual cost of raw materials in med to be 30% of totale. Finally, we wth coverage for accounts payable 1.3 Financial structure mandates Using the notation in Section 5. Chapter 8 in Fahmy (2019), we have the following variables pertaining to the financial structure of the project: 1 - total investuent cost (TIC). = return on investment L = loan R = repayment of the lan, = luterest rate on borowing, * = mber of The following are the options used to compute the optimal capital cure. The rate our estimated by taking the average rate of return on investors of two similar ut from the Toronto Stock Exchange (TSX); namely, MTY Food Group Inc. and Recipe Unlimited Corp. The return on investment of MTY and Recipe are 9.75% and 9.89% respectively. Therefore, the return on investment for our business is estimated to be r = 9.8%. Because our business is eligible to participate in the Canada Small Business Financing Program, the maximum interest rate on borrowing is the bank's prime rate plus 3% (Government of Canada, 2017). Currently, as per the Bank of Canada statistics, the average prime rate is 3.95%. Therefore, the interest on borrowing can be anywhere in the range of 3.95% to 6.95%. Taking the geometric mean of these bounds, we estimate is = 5.24%. We assume that the total investment cost, I will be financed via debt (loan) and equity. The loan is assumed to be paid over 5 installments. 1.4 Financial evaluation mandates The following are the mandates used to compute the net cash flow (NCF): The project's operations is assumed to continue after the 5th year and, thus, no residual value will be estimated . There will not be any change in investments over the life time of the project. The corporate tax for small businesses in BC is 11% (Government of Canada, 2019). Revenues are expected to grow by 2.7% per year (Statistics Canada, 2020) Purchases and indirect costs are expected to grow by the inflation rate in Canada, which, according to the Bank of Canada's recent statistics, is 1.9%. . Again, according to the Bank of Canada's forecasts, wages are expected to grow by 2.8%. Thus, we will assume that direct costs will grow by the same rate. 1.5 Weighted average cost of capital (WACC) mandates The beta coefficient of a similar asset (MTY) in the same risk class is found to be 8 = 0.66. We will use this coefficient to represent the systematic risk of our business. Assume the country risk 7 = 0.02. The interest on deposit, id, is estimated by taking the geometric mean of the minimum rate of 1.1% and the maximum rate of 2% as per the recent statistics posted by the Bank of Canada. Thus, id=V1.1 2 = 1.48%. 1.6 Sensitivity analysis mandates The last step of financial evaluation is to perform a sensitivity analysis to assess the risk of investing in this project. In this analysis, we use the break-even formula as a percentage of capacity to compute the break even quantity Que in various scenarios. The formulas, as given in Fahmy (2019), is QBE(% of capacity) Fixed production costs sales revenue - variable production costs where, in our case, the fixed production costs include rent, wages, salaries, marketing, administration ex- penses, and other costs. The variable production costs include purchases of food and beverages and utilities. 3 Appendix A: Fixed investments costs Fixed Investments Renovation and design of the properly $188,300 Kitchen Art 357.000 Dinning at $3.000 POS riware and software $5,000 Total $250,000 Renovation and design of the property Build It. 2017) MONTCAD per refoot Max (CAD) per refoot Geometric me SNS $230 $145 Total cost for 1,000 square foot $146 x 1300 $18.600 Kitchen area equipment Webstrant Store 20.30. Zanducao, 2020 Equipo Cot SCAD) Unit Toal Cost (SCAD Free 34.599 1 $1,699 Cooler 83.99 1 $3,000 Preptable que $2,573 1 $2,973 Dishwasher $3,909 ! Washing machine 8945 1 $9-15 Grill and equipment $5,500 $11,000 Ventilation system for grill $1,100 $2.200 Ban stocker ! S560 Bun toaster ! $1699 Soda machine and equipment $8,500 1 $8,00 Assembly station $3.299 + $3.290 Packing table $450 1 Fryer equips $1,900 ! $1.990 Microwave $1.000 ! $1,000 Veil. cutlery, and dish ware 39.709 $9.769 Total kitchen area and equipment $57,000 $1699 4 Appendix B: Pre-production capital costs Pre-production capital costs Type Cost (CAD) Source A: Expenditures during registration $1.425 Bislim $100 Bizpal (1) Registration LLC $350 Bizpal (td.) Electric permit $300 Bild) Inter midpal business license $100 Bizpal(.d.) Sign permit Bipal (td.) Food primary $175 Bizplud) B: Expenditures on preparatory studies $2,000 Consultation for $2.000 Butterfield Law (2018) C: Pre-production expenditures $9,708:57 Salary (bring employees 5 days before production) 53.172.05 Rent (1 month rent + Inwarance deposit) S6036.09 Travel ex NA Training cont NA Total pre-production capital cost A+B+C $13, 174 $100