Smiths Laptop Retail and Repair Smith is between jobs right now. He was most recently sing on the board of an overseas oil and gas company. However, he was underqualified for the posion and was eventually let go. Since then, Smith has also sold some of his painngs 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 presgious posion 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. Aer dropping his laptop at Erics Electronics Repair and neglecng to pick it up, Smith, unfortunately, discovered that some sensive informaon 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-fiy 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 me), $10 in materials, and $5 in variable overhead costs. Michelle isnt confident projecng 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 essenal. Smiths addional expenses would be $1,200 monthly for rent, $450 for ulies, and $200 for adversing. Smith plans to use a combinaon 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 geng 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 formang, 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 raos, which will help him make important decisions to run a beter business- he has asked for specific scenarios and explanaons. Smith also wants feedback on his plan to use a combinaon of debt and equity financing. What is an opmal 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 esmated 1,500 laptops before replacing them. Aer doing some rough math, he is not confident in it; Smith is wondering if he should buy the machine now instead of waing. He is also sll determining how the device will be depreciated- he wants you to advise him on the best depreciaon method for this situaon and how the informaon will be presented on the income statement and balance sheet. give answer with calculations