Smith is between jobs right now. He was most recently sitting on the board of an overseas oil and gas company. However, he was underqualified for the position and was eventually let go. Since then, Smith has also sold some of his paintings for large sums. Smith feels frustrated by ongoing chater that he has only done well in his career due to his father, who holds a prestigious position with the federal government. Fortunately, Smith has a new idea. He wants to open a computer retail and repair shop. He recently had a problem with his laptop repair. After dropping his laptop at Erics Electronics Repair and neglecting to pick it up, Smith, unfortunately, discovered that some sensitive information about his personal life had been leaked to the press. Feeling angry about Erics lack of professionalism, Smith thinks that he can open a more ethical repair shop which will compete with Eric. Smith is asking you for advice on business ethics, which would apply to a computer repair business. Smith has spoken to a friend, Michelle, about this business idea and she has determined that he can feasibly sell eighty-five laptops in his first year of business at an average price of $505 per laptop. Smith had contacted a significant computer manufacturer who has quoted him $1,600 for five laptops, $3,000 for ten laptops, or $28,000 for 100 laptops. Michelle also projects one-hundred-and-fifty laptop repairs in the businesss first year, with each repair priced at $90. On average, a laptop repair would cost Smith $40 in labour costs (he cant do repairs himself but is hoping he can learn over time), $10 in materials, and $5 in variable overhead costs. Michelle isnt confident projecting numbers beyond two years but thinks Smith should be able to grow sales and repair numbers by 50% in year two and at least sustain that level in the following years. Michelle has stressed that trend analysis is essential. Smiths additional expenses would be $1,200 monthly for rent, $450 for utilities, and $200 for advertising. Smith plans to use a combination of debt and equity financing- he intends to pay interest of $150 a month and dividends totalling $10,000 at the end of the year. Since Smith knows many wealthy businesspeople worldwide (mainly through a family friend named Barack), he foresees no issues with getting money- he plans to call people and ask them if they want to buy shares or loan money to his new company. Smith is wondering how much money he might be able to withdraw at the end of the businesss first year- he doesnt want to withdraw any cash, which wasnt technically profit. He wants you to prepare, using proper formatting, a first-year projected income statement and a statement of retained earnings for him. Any insight about his projected numbers is greatly appreciated. He is especially interested in a few ratios, which will help him make important decisions to run a beter business- he has asked for specific scenarios and explanations. Smith also wants feedback on his plan to use a combination of debt and equity financing. What is an optimal financing mix for a business like his? What precisely should he know about such a decision? Are there any benefits and drawbacks of using equity? What about debt? If the business does well, Smith might consider buying a $35,000 machine which would cut the labour cost of a laptop repair to only $15. The machine can repair an estimated 1,500 laptops before replacing them. After doing some rough math, he is not confident in it; Smith is wondering if he should buy the machine now instead of waiting. He is also sill determining how the device will be depreciated- he wants you to advise him on the best depreciation method for this situation and how the information will be presented on the income statement and balance sheet. Finally, Smith highly values the local indigenous community and wants to help its members, especially children. He is thinking about gathering volunteer help to produce fifty laptops to sell to a local school at cost (in future, he hopes to donate them for free). In detail, Smith wants you to explain how expenses can be tracked for these fifty laptops, assuming some specialized workers, such as supervisors, are paid hourly. He also wants you to consider assembly line worker costs (assuming he cant find enough volunteers), utility costs, etc. Be sure to give Smith an idea about the necessary journal entries and other essential elements. Smith acknowledges that he has gone through a real struggle in his life but is dedicated to turning things around with an ethical, well-run laptop retail and repair business. In a case analysis drafted by yourself to him, give Smith detailed advice on all issues raised in the case. Feel free to add general business or life advice which may benefit Smith