Today is 1 January 2021. Jake used $200,000 to purchase a cafe business in Sydney. To operate this business, Jake needs to pay rent, maintenance costs and labour costs. Here are the details

Rent will be paid by the end of each month with an amount of $2,000.

Labour cost will be paid by the end of each month with an amount of $10,000.

Maintenance cost will be paid by the end of each quarter with an amount of $500.

Jake predicts that this cafe franchise initially can have monthly revenue of $13,000. Assume that Jake can obtain this amount by the end of each month. Jake forecasts that this revenue amount will increase at the rate of y% p.a. The revenue increase will only happen at the beginning of each year. For example, this cafe franchise initially has monthly revenue of $13,000 in 2021. Then the revenue amount will become $13,000(1+y%) per month in 2022 and $13, 000(1 + y%)2 per month in 2023. Jake assumes the value of y is the same as the Australian CPI rate for 2020. You need to use FactSet to find the Australian CPI rate for 2020.

Jake plans to run this business for three years and predict that he can sell this business on 1 January 2024 with an amount of $210,000.

a. Calculate the monthly net cash flows. Assume that Jack can reinvest all profit at a rate of x% p.a. Use Goal Seek to find this reinvestment rate if Jack requires a holding period yield rate of 7.5% p.a. for this investment (from 1 January 2021 to 1 January 2024). Label this sheet as Part a.

c. Jack plans to use an online promotion service to boost his business from 1 January 2021 to 31 March 2021. The cost of this service is listed in the following table.

Service price list Weekday (Monday to Friday except public holidays) $100 Saturday $150 Sunday and Public holidays $180

Calculate the present value of this promotion cost on 1 January 2021 by using an effective daily interest rate of 0.01%.

Hint:

You can use this link(https://www.industrialrelations.nsw.gov.au/public- holidays/public-holidays-in-nsw/) to find the NSW public holidays for the promotion period.

You can use the Weekday formula in Excel to returns the day of the week corresponding to a date. The day is given as an integer, ranging from 1 (Sunday) to 7 (Saturday), by default.

DISPLAY ALL ANSWERS IN EXCEL PLEASE