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You are thinking about starting a Business, and after doing careful financial analysis you have come up with these details: Drop Shipping Business Initial Capital

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You are thinking about starting a Business, and after doing careful financial analysis you have come up with these details: Drop Shipping Business Initial Capital required to start the business is $10,000 Expected Business Life is 7 years Expected Annual Revenue in Year 1 is 12,000 Expected Annual Expenses in Year 1 is 9,000 You Expect the Annual Revenue to grow at 20% every year You Expect the Annual Expenses to grow at 15% every year In year 4 you expect upgrade expense on physical set-up which would cost you $4000 In year 7 you will scrap all your physical set up for $2000, Assume Straight Line Depreciation Based on the underlying Risk, your annual required return from this business is 8% Calculate the following (Show Complete Working): a) Calculate Annual Cashflows for each year b) Calculate the NPV c) Calculate the Payback d) Calculate the Average Accounting Return e) Calculate the Internal Rate of Return f) Calculate the Profitability Index g) What is your Recommendation

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