Yoga Studio Income Statement Years Ended December 31 Actual Price Increase 2023 Growth 2024 Operating Cas Inflows: Annual membership fees 355,000 15% 10% 408,250 Lesson and class fees 234,000 15% 10% 269,100 Miscellaneous 2,000 15% 10% 2,300 Total Operating Cash Inflows 591,000 Operating Cash Outflows: Manager's salary and benefits 36,000 15% 41,400 Employee wages and benefits: Regular employees 190,000 15% 218,500 Lesson and class employees 195,000 15% 224,250 Towels and supplies 16,000 25% 20,000 Utilities (heat and lights) 22,000 25% 27,500 Miscellaneous 2,000 25% 2,500 Payoff of outstanding A/P 2,500 Total Operating Cash Outflows 461,000 Net Operating Cash Flow 130,000 Non-Operating Cash Outflows: Payoff of equipment payable 10,000 Mortgage principal 480,000 Mortgage interest 43,200 Planned equipment purchases 25,000 Total Non-Operating Cash Outflow 558,200 Net Cash Flow 7,000 Beginning Cash Balance 300 102.300The owners of a yoga studio are considering expanding its facilities by adding additional equipment and expanding its class offerings to include low-impact workouts. The owners plan to purchase about $25,000 of new equipment each year and want to establish a fund to purchase the adjoining property in three to four years. The adjoining property that is being considered has a market value of about $300,000. One of the managers is concerned that these goals are unrealistic because the most recent financial performance does not seem to indicate that this expansion is feasible. This manager has requested your help to examine the company's records and develop a report that will either support or refute the proposed expansion. The yoga studio is primarily a cash business. Below is the most recent income statement: Yoga Studio Income Statement For Years Ended December 31 2023 2022 Revenues: Annual membership fees $ 355,000 $ 300,000 Lesson and class fees 234,000 180,000 Miscellaneous 2,000 1,500 Total revenues $ 591,000 $ 481,500 Expenses: Manager's salary and benefits $ 36,000 $36,000 Regular employees' wages and benefits 190,000 190,000 Lesson and class employees' wages and benefits 195,000 150,000 Towels and supplies 16,000 15,500 Utilities (heat and light) 22,000 15,000 Mortgage interest 35,100 37,800 Miscellaneous 2,000 1,500 Total expenditures $ 496,100 $ 445,800 Net income $ 94,900 $ 35,700 Other financial information as of December 31, 2023: Cash in checking account, $7,000. Petty cash, $300. Outstanding mortgage balance, $360,000. Accounts payable arising from invoices for supplies and utilities that are unpaid as of December 31, 2023, and due in January 2024, $2,500. No other unpaid bills existed on December 31, 2023 The club purchased $25,000 worth of exercise equipment during the current fiscal year. Cash of $10,000 was paid on delivery, with the balance due on December 1. This amount had not been paid as of December 31, 2023. An additional $25,000 (cash) of equipment purchases is planned for the coming year. The club began operations in 2022 in rental quarters. In December 2022, it purchased its current property (land and building) for $600,000, paying $120,000 down and agreeing to pay $30,000 plus 9% Interest annually on the unpaid loan balance each January 1, starting January 1, 2024. . Membership rose 3% In 2023. The club has experienced the same annual growth rate since it opened, and this rate is expected to continue in the future. Membership fees increased by 15% in 2023. The board has tentative plans to increase these fees by 10% in 2024. Lesson and class fees have not been increased for 3 years. The board policy is to encourage classes and lessons by keeping the fees low. The members have taken advantage of this policy, and the number of classes and lessons has