You are the founder of a start$-$up company. You and the other three founders have each invested $15,000$ as seed

capital. You are currently not drawing any salaries from the company. You have already spent $28,000$ on set up and

legal costs. It is January and you have secured a grant, to carry out market research, of $13,000.$ This will be paid in

March. You have contracted a research company to carry out the research for $15,000,$ payable in two lots in Feb &

March.

Your University has taken an equity share in your company of $15\%.$ They are providing you with office space and

mentors to prepare your company to launch your first product. Your product is at an advanced technology readiness

stage and your first product is fully designed and stress tested. It will need a CE mark, which will take another month

at a cost of $6,500$ at time of issue.

You have decided to outsource manufacture for the first year. The delivery lead time from your supplier is one month

and terms are payment on placement of order. Your profit margin is $50\%.$

You have advance orders of $35,000$ from early adopters have already paid $50\%$ deposit and the balance on delivery.

They will accept delivery as soon as the CE mark is confirmed. You project you will generate additional orders, for

which you expect to have stock on hand, as follows:

Your projected purchases for the period are:

Advertising and website costs are normally $650$ per month

$($i$)$ Prepare a cash flow projection for the period Jan$-$ April. State any assumptions you make

$(20$ marks$)$

$($ii$)$ Examine your cash flow. Will you have enough funds to meet your commitments each month?

$(2$ marks$)$

$($iii$)$ If you need investment, to keep positive cash flow to the end of the April and have $80,000$ available to

develop the business in May how much would you need?

$(3$ marks$)$

$($iv$)$ Explain, briefly, the relevance and importance of a cash flow projection?

$(8$ marks$)$