1. Project a pro-forma income statement, balance sheet, and statement of cash inflows and outflows for fiscal 1997 and 1998 for ONLY the new location, using the information presented in the case.Present the financials in Cayman Island dollars; do not translate into US dollars. The fiscal year starts June 1 and ends May 31.

A. Clearly show how you projected your revenues. Hint: use the regression equation shown in exhibit 3 to project revenues, but not for profits, and adjust for the circumstances of the new shop.

B. State clearly any assumptions that you make to complete the financial statements.

EXHIBIT 2 DON FOSTER'S DIVE CAYMAN LTD. BALANCE SHEETS (UNAUDITED) MAY 31 1996 1995 1994 Current Assets: Cash 1,038 1,004 1,701 Accounts Receivable 54,744 67,547 49,502 Inventory 38,103 43,860 46,341 Total Current Assets 93,885 112,411 97,544 Non-Current Assets: Investments $ 3,000 $ 167,000 $ 167,000 Fixed Assets $1,220,097 $1,270,631 $1,341,818 Goodwill $ 384,950 $ 384,950 $ 384,950 Total Non-Current Assets $1,608,047 $1,822,581 $1,893,768 Total Assets $1,701,932 $1,934,992 $1,991,312 Current Liabilities: Short-term Bank Loan 93,608 $ 140,293 $ 122,941 Customer Deposits 46,913 $ 69,349 36,984 Accounts Payable 158,437 113,293 141,415 Total Current Liabilities $ 298,958 $ 322,935 301,340 Long-term Liabilities: Long-term Bank Loan 156,958 $ 189,910 $ 264,953 Note Payable $ 870,741 $ 979,591 $1,078,123 Total Long-term Liabilities $1,027,699 $1,169,501 $1,343,076 Shareholders' Equity: Capital Stock 82 82 82 Paid-In Capital 223,094 223,094 163,377 Retained Earnings $ 152,099 $ 219,380 $ 183,437 Total Equity $ 375,275 $ 442,556 $ 346,896 Total Liabilities and Equity $1,701,932 $1,934,992 $1,991,312\fEXHIBIT 3 RADISSON DIVE SHOP MONTHLY SALES REVENUE (TOP) AND PROFIT FROM OPERATIONS (BOTTOM) 120,000 100,000 y = -556.57x + 98416 80,000 Cayman Dollars 60,000 40,000 y = -412.64x + 34096 20,000 Jun-93 Sep-93 Dec-93 Mar-94 Jun-94 Sep-94 Dec-94 Mar-95 Jun-95 Sep-95 Dec-95 Mar-96