questions (1-4)

2. You plan a new coffee shop: Trusting your culinary instincts and flair for promotion, you decide to open a new coffee shop after graduation. You plan: 1. In the first year, you and your sibling can staff the coffee shop yourselves. Living together, you will be able to make ends meet if you pay yourselves $2,000/month each. 2. You have found the location of a former coffee shop that is full furnished. Rent and other operating costs of this location are $2,500/month. 3. After careful market research, you decide to charge $4.50 per cup for coffee (variable cost = $0.50/cup) and $5.00 for a pastry assortment (variable cost - $1.50/assortment). You estimate that each customer will order one cup of coffee, and half of customers will also order a pastry assortment. 4. After performing a traffic study on nearby coffee shops and considering the competition, you estimate that your customer traffic (daily average number of customers) will build as follows. (Assume the daily average numer of customers will come each day of the month and all months have 30 days.) Month 1: 5 Month 2: 10 Month 3: 20 Month 4: 30 Month 5: 40 Month 6: 50 Month 7: 50 Month 8: 60 Month 9: 75 Month 10: 100 Month 11: 90 Month 12: 60 Questions 1. If you sold only coffee, what is your breakeven number of customers per month. Per day? Which month will be your first cash- postive month (when, on a monthly basis, yd operate above cash- breakeven)? 2. Adding the pastry assortment to your menu changes your breakeven number of customers per month to how many? With that change, would your the first cash-positive month be different? If so, which month would it be? 3. If you launch your business offering tloth the coffee and pastry assortment, how many customers to you need to break-even on a cash basis for the whole year? In which month would you achieve that? 4. What is the minimum amount of cash investment you will need in order not to run out of cash before you achieve cash breakeven if you decide to offer both coffee and pastries? (Assume: (a) no taxes are payable until the business has generated a cumulative profit,and (b) no investment is required for working capital or long-term assets.)