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  1. 1. 2012 Lawrence Samuels;LawSamuels@hotmail.com
  2. 2. Lawrence Samuels*LawSamuels@hotamil.com *JANUARY 2012 TO JANUARY 2013BUSINESS LEADERSInternational CommunityPortfolio for your PerusalThank you, for taking the time to learn more about me. I hope my skills, qualifications, and pursuitof excellence will not only meet your requirements but inspire you to reach higher. Enclosed aredetails about me which include: 1. Corporate Valuation and Forecasting 2. Accounting entries 3. Statistical Analysis 4. Additional Tools and ResourcesMany will say “you cannot judge a book by its cover,” not only do I wish my cover page passes yourperusal but also I hope my portfolio will create the drive for us to build a lasting relationship. Agood team can foster change and continue to make a difference in all business pursuits. Not only isthis an invitation for a long-term partnership but also a call of action for you to make a choice today.Again, thank you for the opportunity and I hope I too can learn more about you.Sincerely,Lawrence Samuelsmailto:LawSamuels@hotmail.com?subject=Contact "There are two ways of spreading light: to be the candle or the mirror that reflects it." - Edith Wharton- 1|Page
  3. 3. TABLE OF CONTENTSINVITATION LETTER: 1THUMBS UP CORPORATION 3BACKGROUND 4MARKETING OVERVIEW 5-62010 BUSINESS OVERVIEW 8FIRST QUARTER SALES RESULTS 101 9SECOND QUARTER SALES RESULTS 101 10THIRD QUARTER SALES RESULTS 101 11FOURTH QUARTER SALES RESULTS 101 12YEAR ENDING DECEMBER 2010 REGION RESULTS 13YEAR ENDED IN DECEMBER 2010 14ADDITIONAL JOURNAL ENTRIES 152011 AFN BUDGET AND 5 YEAR FORECASTED STATEMENTS TARGETS 16FORECASTED BALANCE SHEET 17EXPANSION PROJECT EVALUATION 18INDIA PROJECT ANALYSIS 19-20SOUTH AMERICA PROJECT 20-21SERVICE ANALYSIS 21DETAILED BUDGET 22 2|Page
  4. 4. Thumbs Up CorporationPurchase of PatentPatent 125,000Patent 125,000Patent 125,000 3|Page
  5. 5. Thumbs Up CorporationBACKGROUNDCorporation was founded in 2009, by three entrepreneurs ona journey to make everyone happy. Frisbee Jersey, owner andco-founder, said he wanted to bring “laughter to millions andexcitement for all.” Thumbs Up’s founders have contributedmuch of their success to Disney philosophy of seeking “theultimate element of surprise.” They pride themselves on avision towards satisfying their customers and employees firstand performance and profits are the true measures of theircustomer-employee relationships. In turn, profits andperformance are the ultimate payoff.PROJECTSThe three entrepreneurs set up two mutually inclusive projects: One located in the west and the other inthe south east to generate buzz about the products and establish a customer based. They wanted toknow who is attractive to the product, what price are consumers willing to pay, and where they shouldsell the products. With an initial investment of 695 thousand dollars in the west and 575 thousanddollars in the east they begin positioning their product by product class and use into small businessesand retail outlets. Project A, the west region, they projected cash inflows on a 7 month time period witha rate of return of 25.67 percent in comparison to Project B, East Region, which they reached 38.79percent. The payback period was 6 months for both projects considering the free samples in the westsales growth was slower in the first 3 months with cash inflows of: -300,000 and -200,000 however inthe 4 remaining months the team was able to generate over 3.3 million in cash flows. NPV AT WEIGHTED AVERAGE COST ON CAPITAL Project A ProjectB ($695) ($575) Expected Net Cash Flows @ 8% cost of capital 0% $2,131 $1,060 2% $1,819.21 $940 Time Project A Project B WACC = 8% 4% $1,545.94 $834 0 ($695) ($575) 6% $1,305.74 $739 8% $1,094.02 $654 1 ($300) $290 NPV A = $1,094.02 10% $906.92 $577 12% $741.15 $509 2 ($200) $290 NPV B = $653.80 14% $593.92 $446 16% $462.87 $390 3 $500 $190 18% $345.95 $339 4 $600 $190 20% $241.41 $292 22% $147.77 $249 5 $600 $190 24% $63.71 $210 26% ($11.89) $174 6 $926 $190 28% ($79.99) $141 30% ($141.45) $110 7 $700 $295 4|Page
  6. 6. Thumbs Up CorporationREINVESTMENT OF CASH FLOWSWith the cash flows the group reinvested the cash inflows at the 8 percent costs on capital andestablished 5 offices in the United States and purchase a T-bill with a return of 8 percent. The threefounded thumbs up Corporation and created 5 sales offices in the United States and updated theirsoftware to gear for the first product launch. With prototypes already out, the team is targeting thosecustomers in the first quarter to upgrade their software and hardware so they can ride with excitement.MISSION STATEMENTTo create value, convenience, style and Luxury to shareholders by bringing excitement to millions andcreating a relationship through outstanding customerinteractions and products that are the ultimate element ofsatisfaction.SCOPEOur plan is to create wealth for our owners and excitement forour customers and community by inspiring our employees to aimhigh in their career goals and convey leadership that enhancesthe profitability of the company and lifestyle of our customers. The company will provide exceptionalservice, pricing that is affordable, and high quality products by focusing on innovation, and creativitythat differentiates us from our competitors.OBJECTIVES 1. 50 percent Market Share by 2016 2. High Return on Equity 3. Promising Growth of all products and Services 4. High Free Cash Flows 5. Focus on the personality of the brand and the lifestyle of our customers 6. Create value for all generations and cultures. Simply, everyone.STRATEGIESFreebie believed that he will achieve his goals by offering products and services that are competitive,financing options that appeal to the masses, packaging products to extend value, and to create strongsales teams across all regions that will support their financial growth. By establishing a strong workforcethey believe they will be able increase operating expenses to expand, increase sales in rural and urbanareas -expand without restricting their profitability and also, to provide the workforce with the tools andresources necessary to achieve their sales targets. 5|Page
  7. 7. Marketing OverviewTARGETING AND SEGMENTINGThe company in the past targeted doers, innovators, Believers, thinkers and experiencers with a productline that’s new and hip. From their test market results they were astonished by customer responses andhad positive field focus groups. They distributed thousands of samples and information in metropolitanMarkets where they intend to expand their operations. The founders expect a promising year andsome analysts say there returns can be as high as 12 percent.For 2010, the company will be launching a marketing campaign that targets generations rather thanpersonality types. They will also, use a strategic social media strategy to increase online sales and buildbrand awareness. The company seeks to position the product by use and class by communicating thebenefits of using the product and luxury attributes that differentiates the product from theircompetitors. With such a strategy the company hopes to close the gap between the customerperceptions of the product in comparison to their competitors. In an industry of complexity, the company seeks to increase ownership experience and create a long term connection with their customers by managing their product lifecycle with their customer lifestyle,and managing the consumer purchasing behavior through promotions and direct advertising, in order to achieve a 15 percent growth over the next 5 years. To accomplish this goal, the company will be expanding their product line and advertising new product launches through targeted mass media. Thumbs up corporation understand that the point of contact at their sales offices will determine the success they will have with sales so they shift their focus on providing their customers with the exciting experience that they would receive by using their products, mere excitement! INCREASING OWNERSHIP EXPERIENCE AND CUSTOMER INTERACTIONS 6|Page
  8. 8. Operations OverviewMARKETING TACTICSThumbs up corporation asked themselves where do their customers spend most of their time and howcan they penetrate the market and reach as many customers as possible? To answer such a questionsthe company deducted surveys and found out that many of their customers are either at work, school,spending time with the family, or taking part in extracurricular activities in the community. With theinformation the company decided to use 4 marketing tactics aimed at aligning their attributes of styleand luxury to their target market concern with identity, security, and status: (Generational Traits) 1. Relationship Marketing through partnerships with corporations 2. Generation Marketing to target diverse social groups and the masses 3. Multicultural Marketing to target every race with cultural tactics and use generation and Multicultural marketing interchangeably. 4. Green Marketing to educate their consumers to their social responsibility policies through public relations efforts and advertising. Use as a tactic with Generation Marketing. MARKETING MAP 7|Page
  9. 9. 2010 Business OverviewCOMMISSION BASED SYSTEMCOMING SOON 8|Page
  10. 10. Thumbs up ForecastingFORECASTINGBased off a panel of experts and their test market results the regions forecasted the first 5 years of salesusing 3 approaches: 1. Moving average forecast based off the unit samples, purchases and backorders 2. Weighted average based off the variables above in relation to monthly sales 3. Exponential smoothing based off same variables and a grouping monthly sales.The company compared the forecasted data to develop a decision on which forecasting model to use.The company used the risks to determine the best case to worst case scenario based off high to lowdemand in comparison to total unit sales throughout a quarter.Period ActualUnits WeightsMonth 1 2600 1Month 2 2300 2 2010 2011 2012 2013 2014 2015Month 3 2600 3 MAForecast MAForecast MAForecast MAForecast MAForecast MAForecast 2010 2011 2012 2013 2014 2015Month 4 4500 2500 2143.111111 2039.888889 2422.407407 3032.43694 2942.818435 Wt Forecast Wt Forecast Wt Forecast Wt Forecast Wt Forecast Wt ForecastMonth 5 3600 3133.333333 2510.049383 2614.878722 2768.918657 2816.083296 2715.855642 2500 2528.833333 18450.77778 16190.9537 33079.5571 18233.91757Month 6 3050 3566.666667 2528.019608 2670.141313 2721.014551 2766.743806 2763.646468 12833.33333 2593.166667 13252.97222 19741.18056 29777.13812 47811.90252Month 7 1500 3716.666667 3066.666667 2393.726701 2441.636308 2637.446872 2871.754681 3733.333333 2528.833333 7951.611111 17892.95833 102288.8349 41295.91744Month 8 2001 2716.666667 3472.222222 2701.578552 2559.582245 2643.856506 2740.091325 3475 6561.111111 2550.277778 11468.59259 18225.36497 66583.38966Month 9 2002 2183.666667 3333.333333 3022.302832 2588.482189 2574.077701 2682.682395 3566.666667 5120.833333 4555.694444 6134.50463 14988.8125 48171.81713Month 10 2055 1834.333333 2872.333333 3290.740741 2705.869362 2529.900247 2618.46036 1500.5 3563.888889 5168.925926 4453.208333 9872.276235 30617.66705Month 11 2059 2019.333333 2244.888889 3225.962963 3004.874042 2617.977932 2582.611485 1668 2518.305556 4582.407407 4528.074074 6182.871142 12969.96978Month 12 3000 2038.666667 2012.444444 2816.851852 3179.668845 2766.408531 2573.985294 1694.833333 1928.611111 3300.587963 4773.46142 4770.857253 8880.329733 2371.333333 1964.111111 2376.555556 3111.185185 2963.47075 2638.09557 1714.5 1653.5 2397.722222 4039.250772 4638.290123 6091.765046Forecasted Month 2371.333333 2143.111111 2073.814815 2806.45679 3098.576024 2782.619071 2186.333333 1700.194444 1889.337963 3062.791667 4365.458205 4939.909336 Total: 26080.66667 26147.1801 27152.62812 27503.63879 27348.40258 27130.00165 34872.5 30697.27778 64100.31481 92284.97608 228189.4605 285596.5853Smoothing Variable 1 0.000670364 Moving Average WeightedSmoothing Variable 2 0.35% Error Absolute Error Squared Error Abolute %Error Error Absolute Error Squared Error Abolute %ErrorSmoothing variable 3 -35.02% 2000 2000 4000000 44.44% 2000 2000 4000000 44.44% 466.6666667 466.6666667 217777.7778 12.96% -9233.333333 9233.333333 85254444.44 256.48% -516.6666667 516.6666667 266944.4444 16.94% -683.3333333 683.3333333 466944.4444 22.40% -2216.666667 2216.666667 4913611.111 147.78% -1975 1975 3900625 131.67% -715.6666667 715.6666667 512178.7778 35.77% -1565.666667 1565.666667 2451312.111 78.24% -181.6666667 181.6666667 33002.77778 9.07% 501.5 501.5 251502.25 25.05% 220.6666667 220.6666667 48693.77778 10.74% 387 387 149769 18.83% 39.66666667 39.66666667 1573.444444 1.93% 364.1666667 364.1666667 132617.3611 17.69% 961.3333333 961.3333333 924161.7778 32.04% 1285.5 961.3333333 924161.7778 32.04% Average 813.2222222 1213104.877 34.63% Average 1963.481481 10836819.6 69.65% MAD MSE MAPE MAD MSE MAPE 9|Page
  11. 11. Thumbs up Forecasting Unit Sales Moving average total units were 26, 080 with a forecast error of 34.63 percent in the first year in comparison to 34, 872 units with an error of 69.65 percent for the weighted average. The company forecasted they would sell at least 2371 units in the coming month. Exponential smoothing below, with an alpha of .419 yields 31,200 units with an error of 27.73 percent. Low Demand – Moderate Demand-High Demand Forecast .10 Forecast .5 Forecast .9Month ActualUnits 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015Month 1 2600 2600 2600 2600 2600 2600 2600 2600 2600 2600 2600 2600 2600 2600 2600 2600 2600 2600 2600Month 2 2300 2600 2600 2600 2600 2600 2600 2600 2600 2600 2600 2600 2600 2340 2106 1895.4 1705.86 1535.274 1381.7466Month 3 2600 2570 2600 2600 2600 2600 2600 2474.3 2547.3317 2577.931982 2590.753501 2596.125717 2598.376675 2070 1863 1676.7 1509.03 1358.127 1222.3143Month 4 4500 2573 2597 2600 2600 2600 2600 2526.9683 2538.799435 2561.535445 2578.511135 2588.745207 2594.34109 2340 2106 1895.4 1705.86 1535.274 1381.7466Month 5 3600 2765.7 2594.6 2599.7 2600 2600 2600 3353.668582 2880.229608 2695.068299 2627.348587 2604.920023 2598.773663 4050 3645 3280.5 2952.45 2657.205 2391.4845Month 6 3050 2849.13 2611.71 2599.19 2599.97 2600 2600 3456.881446 3121.846728 2873.888461 2730.648794 2657.600378 2623.422057 3240 2916 2624.4 2361.96 2125.764 1913.1876Month 7 1500 2869.217 2635.452 2600.442 2599.892 2599.997 2600 3286.39812 3190.793762 3006.671782 2846.302426 2736.666536 2670.871494 2745 2470.5 2223.45 2001.105 1800.9945 1620.89505Month 8 2001 2732.2953 2658.8285 2603.943 2599.947 2599.9865 2599.9997 2537.897308 2917.230147 2969.195737 2897.794723 2804.179247 2726.727442 1350 1215 1093.5 984.15 885.735 797.1615Month 9 2002 2659.16577 2666.17518 2609.43155 2600.3466 2599.98255 2599.99838 2312.937336 2664.031459 2841.331905 2874.136802 2833.491463 2771.461567 1800.9 1620.81 1458.729 1312.8561 1181.57049 1063.413441Month 10 2055 2593.449193 2665.474239 2615.105913 2601.255095 2600.018955 2599.996797 2182.654592 2462.334552 2682.532014 2793.854396 2816.883532 2790.49337 1801.8 1621.62 1459.458 1313.5122 1182.16098 1063.944882Month 11 2059 2539.604274 2658.271734 2620.142746 2602.640177 2600.142569 2599.999013 2129.167318 2322.737481 2531.778105 2684.04443 2761.223948 2778.229482 1849.5 1664.55 1498.095 1348.2855 1213.45695 1092.111255Month 12 3000 2491.543846 2646.404988 2623.955644 2604.390434 2600.39233 2600.013368 2099.767212 2229.312938 2405.0452 2567.143753 2679.904346 2737.03125 1853.1 1667.79 1501.011 1350.9099 1215.81891 1094.237019Forecasted Month 19 31843.10538 31533.91664 31271.91085 31208.44131 31200.5199 31200.00726 31560.64021 32074.64781 32344.97893 32390.53855 32279.7404 32089.72809 28040.3 25496.27 23206.643 21145.979 19291.38083 17622.24275 Total Units 188257.9013 Total Units 192740.274 Total Units 134802.8153 Forecast .10 Forecast 0.419 Forecast .9Error Absolute ErrorSquared Error Abolute %Error Error Absolute Error Squared Error Abolute %Error Error Absolute Error Squared Error Abolute %Error -300 300 90000 13.04% -300 300.00 90000 13.04% -40 40 1600 1.74% 30 30 900 1.15% 125.7 125.70 15800.49 4.83% 530 530 280900 20.38% 1927 1927 3713329 42.82% 1973.0317 1973.03 3892854.09 43.85% 2160 2160 4665600 48.00% 834.3 834.3 696056.49 23.18% 246.3314177 246.33 60679.16735 6.84% -450 450 202500 12.50% 200.87 200.87 40348.7569 6.59% -406.8814463 406.88 165552.5114 13.34% -190 190 36100 6.23% -1369.217 1369.217 1874755.193 91.28% -1786.39812 1786.40 3191218.244 119.09% -1245 1245 1550025 83.00% -731.2953 731.2953 534792.8158 36.55% -536.8973079 536.90 288258.7192 26.83% 651 651 423801 32.53% -657.16577 657.16577 431866.8493 32.83% -310.9373359 310.94 96682.02685 15.53% 201.1 201.1 40441.21 10.04% -538.449193 538.449193 289927.5334 26.20% -127.6545922 127.65 16295.6949 6.21% 253.2 253.2 64110.24 12.32% -480.6042737 480.6042737 230980.4679 23.34% -70.16731804 70.17 4923.452521 3.41% 209.5 209.5 43890.25 10.17% 508.4561537 508.4561537 258527.6602 16.95% 900.2327882 900.23 810419.073 30.01% 1146.9 1146.9 1315379.61 38.23%Average 732.0330292 852441.8487 30.40% Average 645.9813245 868593.4381 27.73% Average 635.5888889 403973.2357 25.19% 10 | P a g e
  12. 12. Forecasted Unit Sales Cash Budget Thumbs up Corporation require financing of 1,732,076.22 to cover 12 months of operations to sustain a minimum cash balance of 3,100,000 for the year. The three owners assume that if 20 percent of sales were account receivables than, the remaining units sold will be in form of cash in which if those funds are not invested the company will have approx. 3 million of excessive cash. Forecasted Unit sales January February March April May June July August September October November December Total Northeast 456.00 457.00 434.15 443.27 558.52 557.49 724.73 507.31 456.58 483.98 496.08 489.63 6064.73 East 441.00 441.00 418.95 427.33 538.43 537.38 591.12 413.79 372.41 350.06 341.31 336.53 5209.32 Southeast 412.00 412.00 391.40 399.23 503.03 502.00 552.20 386.54 347.88 327.01 318.84 314.37 4866.49 Midwest 434.00 434.00 412.30 420.55 529.89 528.92 317.35 222.15 199.93 187.94 183.24 180.67 4050.92 Southwest 399.00 400.00 380.00 387.98 527.65 526.60 537.13 375.99 417.35 392.31 382.50 377.15 5103.69 West 458.00 459.00 436.05 445.21 560.96 559.91 571.11 399.78 443.75 470.38 482.14 475.87 5762.15 Total 2600.00 2603.00 2472.85 2523.56 3218.48 3212.30 3293.65 2305.55 2237.91 2211.68 2204.10 2174.22 31057.30 Cumulative 2600.00 5203.00 7675.85 10199.41 13417.89 16630.19 19923.83 22229.39 24467.30 26678.97 28883.07 31057.30 Forecasted Sales Northeast 36475.44 36555.43 34727.66 35456.94 44675.74 44593.35 57971.36 40579.95 36521.96 38713.27 39681.11 39165.25 485117.47 East 35275.59 35275.59 33511.81 34182.05 43069.38 42985.39 47283.93 33098.75 29788.87 28001.54 27301.50 26919.28 416693.69 Southeast 32955.88 32955.88 31308.09 31934.25 40237.15 40154.76 44170.24 30919.17 27827.25 26157.62 25503.67 25146.62 389270.58 Midwest 34715.66 34715.66 32979.88 33639.47 42385.74 42308.15 25384.89 17769.42 15992.48 15032.93 14657.11 14451.91 324033.29 Southwest 31916.01 31996.00 30396.20 31034.52 42206.95 42122.96 42965.42 30075.79 33384.13 31381.08 30596.55 30168.20 408243.81 West 36635.42 36715.41 34879.64 35612.11 44871.26 44787.27 45683.02 31978.11 35495.70 37625.45 38566.08 38064.72 460914.20 Total Sales $ 207,974.00 $ 208,213.97 $ 197,803.27 $ 201,859.34 $ 257,446.22 $ 256,951.88 $ 263,458.85 $ 184,421.19 $ 179,010.40 $ 176,911.89 $ 176,306.03 $ 173,915.99 $2,484,273.04 Cumulative $ 207,974.00 $ 416,187.97 $ 613,991.24 $ 815,850.58 $ 1,073,296.80 $ 1,330,248.69 $ 1,593,707.54 $ 1,778,128.73 $ 1,957,139.13 $ 2,134,051.02 $ 2,310,357.05 $ 2,484,273.04 ExpensesAdministrative/CGS/ 41,594.80 60,382.05 57,362.95 58,539.21 74,659.40 74,516.05 76,403.07 53,482.15 51,913.01 51,304.45 51,128.75 50,435.64 701,721.52R&D 4,159.48 6,246.42 5,934.10 6,055.78 7,723.39 7,708.56 7,903.77 5,532.64 5,370.31 5,307.36 5,289.18 5,217.48 72,448.45Marketing 31,196.10 10,410.70 9,890.16 10,092.97 12,872.31 12,847.59 13,172.94 9,221.06 8,950.52 8,845.59 8,815.30 8,695.80 145,011.05Bonus 2,079.74 2,082.14 1,978.03 2,018.59 2,574.46 2,569.52 2,634.59 1,844.21 1,790.10 1,769.12 1,763.06 1,739.16 24,842.73Finance 2,079.74 2,082.14 1,978.03 2,018.59 2,574.46 2,569.52 2,634.59 1,844.21 1,790.10 1,769.12 1,763.06 1,739.16 24,842.73Total Expenses $ 81,109.86 $ 81,203.45 $ 77,143.28 $ 78,725.14 $ 100,404.03 $ 100,211.23 $ 102,748.95 $ 71,924.27 $ 69,814.05 $ 68,995.64 $ 68,759.35 $ 67,827.24 $ 968,866.48Cumulative $ 81,109.86 $ 162,313.31 $ 239,456.58 $ 318,181.73 $ 418,585.75 $ 518,796.99 $ 621,545.94 $ 693,470.20 $ 763,284.26 $ 832,279.90 $ 901,039.25 $ 968,866.48 Operating Income 126,864.14 127,010.52 120,660.00 123,134.20 157,042.19 156,740.65 160,709.90 112,496.93 109,196.34 107,916.25 107,546.68 106,088.76 1,515,406.55Minimum Cash $ 262,047.24 $ 262,349.60 $ 249,232.12 $ 254,342.77 $ 324,382.24 $ 323,759.37 $ 331,958.15 $ 232,370.71 $ 225,553.10 $ 222,908.98 $ 222,145.60 $ 219,134.15 $ 3,130,184.03Required Financing (135,183.10) (135,339.08) (128,572.13) (131,208.57) (167,340.04) (167,018.72) (171,248.25) (119,873.78) (116,356.76) (114,992.73) (114,598.92) (113,045.39) (1,614,777.47) 11 | P a g e
  13. 13. FinancingREGIONSMongote Bank approved a loan for 804, 531 with the costs of capital at 10 percent; the companywith the funds attained the plant and equipment, inventory, and reinvested 120,000 in a portfolio ofstocks with an average return of 15 percent. The companies established 5 regions: Northeast, East,South, Southwest and West and linked those regions with the small offices purchase after testmarket projects A and B. Within the 5 regions exists 3 divisions; with unit costs 9.65 the companydecided to purchase 21195 units and distributed across the regions. The company also sold 300,000shares of stock to raise additional capital at par value 10 dollars a share. With this capital thecompany is considering expanding their operations in the future and how they should they investsuch funds short-term to raise additional capital. Unfortunately, the bond market is poor withreturns lower than 5 percent therefore management receded their decision to purchase bonds andinstead decided in December they will purchase stocks, receive dividends, and then sell the stocks inJanuary.S OLD 300,000 SHARES OF C OMMON S TOCK FOR 5 DOLLARS PER SHARE AND PURCHASE A PATENT FOR 125,000. (1,375,000).Capital Stock (30000 shares 10) 300,000Additional Paid in Capital 2,625,000M ONGOTE B ANK APPROVED A LOAN FOR 804,531, THE FUNDS WERE ALLOCATED : (A DJUSTMENT FOR CASH )Jan 23, 2010 Approved LoanCash-Marketable securities 120,000.00Inventory 204,531.00Plant and equipment 480,000.00Account Payable and Personal loan 804,531.75PURCHASE OF STOCK A WITH AN EXPECTED RETURN OF 15 %Investment in Stock A 120,000 Cash 120,000Prepaid Rent 25,000 Cash 25, 00 12 | P a g e
  14. 14. 13 | P a g e
  15. 15. First Quarter Record of Sales Cash 394,538.93 Account Receivable 163,872.92 Sales Revenue 801,619 Record of Goods Sold Costs of Goods Sold 96,731.6 Inventory 96,731.6 Divisional Sales COLLECTIONS FROM CUSTOMERS Total Quarter 1 Cash 47,522 Services Account Receivable 47,522Technology Car Units 0.00 5000.00 10000.005000.00 1 14 | P a g e
  16. 16. First QuarterRegion Products Units Sold Cost per Unit Profit Price Per Unit Earnings Total Operating Costs Account Recv Cash Sales EBIT North East Unit Sales Car Units 641 62.39 97.59 159.98 62,553.78 39,993.40 185.89 44,413.18 62,553.78 Technology 613 19.50 30.49 49.99 18,692.76 11,951.11 177.77 13,271.86 18,692.76 Consumer goods 342 15.60 24.39 39.99 8,342.71 5,333.87 99.18 5,923.33 8,342.71 91416287.62 Total 1596 97.48 152.48 249.96 89,589.25 57,278.38 462.84 63,608.37 89,589.25 East Car Units 748 58.50 91.49 149.99 68,437.44 43,755.08 216.92 48,590.58 68,437.44 Technology 602 11.70 18.29 29.99 11,012.93 7,041.05 174.58 7,819.18 11,012.93 Consumer goods 339 11.70 18.29 29.99 6,201.63 3,964.98 204 2,469.68 6,201.63 Total East 1689 81.89 128.08 209.97 85,652.00 54,761.11 595.5 58879.43565 85,652.00 South East Car Units 733 62.39 97.59 159.98 71,531.86 45,733.48 212.57 50,787.62 71,531.86 Technology 587 15.60 24.39 39.99 14,319.22 9,154.91 170.23 10,166.65 14,319.22 Consumer goods 391 15.60 24.39 39.99 9,538.01 6,098.08 113.39 6,771.99 9,538.01 Total 1711 93.58 146.38 239.96 95,389.09 60,986.47 496.19 67726.25504 95,389.09 Midwest Car Units 676 62.39 97.59 159.98 65,969.35 42,177.13 196.04 46,838.24 65,969.35 Technology 541 15.60 24.39 39.99 13,197.10 8,437.49 156.89 9,369.94 13,197.10 Consumer goods 372 15.60 24.39 39.99 9,074.53 5,801.75 107.88 6,442.92 9,074.53 Total 1589 93.58 146.38 239.96 88,240.98 56,416.37 460.81 62651.09829 88,240.98 Southwest Car Units 691 58.50 91.49 149.99 63,222.28 40,420.81 200.39 44,887.82 63,222.28 Technology 552 19.50 30.49 49.99 16,832.63 10,761.85 160.08 11,951.17 16,832.63 Consumer goods 368 15.60 24.39 39.99 8,976.96 5,739.36 106.72 6,373.64 8,976.96 Total 920 35.09 54.89 239.97 89,031.87 56,922.02 467.19 63,212.63 89,031.87 West Car Units 783 66.30 103.69 169.99 81,192.32 51,909.85 227.07 57,646.55 81,192.32 Technology 627 19.50 30.49 49.99 19,119.68 12,224.05 181.83 13,574.97 19,119.68 Consumer goods 418 15.60 24.39 39.99 10,196.65 6,519.17 121.22 7,239.62 10,196.65 Total 1828 101.3883 158.58 259.97 110,508.65 70,653.07 530.12 78,461.14 110,508.65Sales $746,546.67Operating Costs $ 357,017.41Earnings Before Interest and Taxes $558,411.85 In the first quarter the company sold over 10,000 core products, car units exceeding 4,000 sales. The average amount of units sold per region was over 1,600 with the west region leading the way in each product category with 1,828 total unit sales. The company operation before interest and taxes is performing well. Total Cash sales are 394,538.93 with a total earnings before interest and taxes of 558, 411.85. 15 | P a g e
  17. 17. Second Quarter STANTON BANK APPROVED A LOAN; THE FUNDS WERE ALLOCATED TOWARDS INVENTORY , REINVESTMENT , AND PLANT AND EQUIPMENT FOLLOWING : Cash -Marketable securities 480,000.00 Inventory 204,531.00 Plant and equipment 120,000 Account Payable 804,531.75 April 23, 2010 to June 23, 2010(11181 Units for 9.65 Unit) Cash 437,955.34 Account Receivables 456, 412.85 Sales Revenue 894,368.19 16 | P a g e
  18. 18. Second QuarterRegion Products Units Sold Cost per Unit Profit Price Per Unit Earnings Total Operating Costs Account Recv Cash Sales North East Unit Sales Car Units 708 62.39 97.59 159.98 69,092.16 44,173.68 205.32 49,055.44 Technology 567 19.50 30.49 49.99 17,290.04 11,054.29 164.43 12,275.93 Consumer goods 567 15.60 24.39 39.99 13,831.34 8,842.99 164.43 9,820.25 118018699.1 Total 1842 97.48 152.48 249.96 100,213.55 64,070.96 534.18 71,151.62 East Car Units 826 58.50 91.49 149.99 75,573.96 48,317.78 239.54 53,657.51 Technology 661 11.70 18.29 29.99 12,092.27 7,731.12 191.69 8,585.51 Consumer goods 441 11.70 18.29 29.99 8,067.61 5,157.98 204 4,335.65 Total East 1928 81.89 128.08 209.97 95,733.84 61,206.88 635.23 66,578.68 South East Car Units 811 62.39 97.59 159.98 79,143.71 50,600.07 235.19 56,192.03 Technology 648 15.60 24.39 39.99 15,807.25 10,106.27 187.92 11,223.15 Consumer goods 432 15.60 24.39 39.99 10,538.16 6,737.52 125.28 7,482.10 Total 1891 93.58 146.38 239.96 105,489.12 67,443.86 548.39 74897.27364 Midwest Car Units 748 62.39 97.59 159.98 72,995.67 46,669.37 216.92 51,826.93 Technology 598 15.60 24.39 39.99 14,587.55 9,326.47 173.42 10,357.16 Consumer goods 359 15.60 24.39 39.99 8,757.41 5,599.00 104.11 6,217.76 Total 1705 93.58 146.38 239.96 96,340.64 61,594.83 494.45 68401.85206 Southwest Car Units 763 58.50 91.49 149.99 69,809.85 44,632.52 221.27 49,564.99 Technology 633 19.50 30.49 49.99 19,302.64 12,341.03 183.57 13,704.87 Consumer goods 407 15.60 24.39 39.99 9,928.32 6,347.61 118.03 7,049.11 Total 1040 35.09 54.89 239.97 99,040.80 63,321.17 522.87 70,318.97 West Car Units 866 66.30 103.69 169.99 89,798.92 57,412.42 251.14 63,757.23 Technology 693 19.50 30.49 49.99 21,132.27 13,510.80 200.97 15,003.91 Consumer goods 642 15.60 24.39 39.99 15,660.88 10,012.70 186.18 11,119.23 Total 2201 101.3883 158.58 259.97 126,592.07 80,935.92 638.29 89,880.37 In the second quarter most regions experience positive growth in sales selling on average 1728.33 units with the West Region reaching 2, 201.00 units sold and becoming the benchmark for future sales with an average price of 86.65 per unit comparable to the company average of 79.99 unit price. The second quarter results are an average growth of 14.51 percent, exceeding first quarter sales by 1,019 units sold. Total Growth for the company in the second quarter was 14.95 percent with a standard deviation of 13.01 percent indicating not only the distribution of units sold but also the reliability of future sales. 17 | P a g e
  19. 19. Third Quarter 2500 2000 Car Units 1500 Technology 1000 Services 500 All Products 0 Third quarter results were just above 10,330 units with an average of 1721.83 units sold. The west region exceeded expectations again with 2064 units sold a 6 percent decrease in growth from the previous quarter. Comparable quarter results the company growth declined 3.89 percent and the current growth rate is 10 percent. Technology is up 12.12 percent in the west and services are up 6.69 percent in the Midwest.JULY 23, 2010 TO SEPT 23, 2010 (10747 UNITS SOLD79.99/9.65 UNIT)Cash 352,457Account Receivables including operating costs 507,194 Sales Revenue 859,652.53Costs of Goods Sold 118,971.53 Inventory 118,971.53 18 | P a g e
  20. 20. Fourth Quarter 7000.00 6000.00 5000.00 EBIT 579,301.66 4000.00 Car Units Account Rcv 169,527.77 3000.00 Technology Sales 830136.22 2000.00 Services Total Operating Profit Margin 1000.00 0.00 69.78In the fourth quarter the company experience a slight decline in sales just at 10, 378 unit sales withearnings before interest and taxes of 579, 301. The average amount of units sold is 1729.67 with astandard deviation of 1904.00 units. The west region was above average at 1904.00 units.Comparable quarter results sales are down 3.63 percent.SEPT 23, DECEMBER 23 (10378/9.65 UNIT)Cash 41060.56AR 59087.14 Sales Revenue 830,136.22Salary Expense-Operating Expenses 914,352.30 Cash 914,352.30(120,000 Market valueDepreciation Expense 120,000 Cash 120,000RECEIPT OF DIVIDENDS FOR STOCK ACash 5,000Investment in Stock A 5,000 19 | P a g e
  21. 21. Year Ending December 2010 Region Results All Regions All Regions 17500 17000 16890 16500 16200 16000 15500 15458 15000 15052 14500 14000 Quarter 1 Quarter 2 Quarter 3 Quarter 4MANAGEMENT MEETING AND ANALYSIS OF SALESThe second quarter experience the largest growth of 14.95 percent reaching 16890 units and thewest region reached a total of 2201 sales. Since the start of the company, sales are declining byapprox. 4 percent. Management projects that in 2011 the company can reach a growth rate of 10percent from 2010 to 2011. 20 | P a g e
  22. 22. Year Ended In December 2010 21 | P a g e
  23. 23. Add The company acquired a 25 percent stake in XYZ Company gaining 25 percent of their net income. XYZ Company is a North America Transportation Company who specialized in commercial fleets and rentals. Management plans in 2011 to expand and utilized their relationship with XYZ to gain economies of scale and costs efficiency. The company also, extended their stock portfolio and purchase additional inventory. The company in 2012 plans to issue 200,000 shares of stock to support future growth and expansion. 2012 – Increase Sales, Spending, Financing and Inventory 2014 – Expansion Project 2015 – Replacement ProjectMARKETABLE SECURITIES INVESTMENTSPurchase a bond for 10,000 with a fair value of 9,000Investment in Bond A 10,000 Investment in Maturity Debt Securities 10,000Investment in Stock Portfolio B 72,000 Cash 72,000PURCHASE 25 PERCENT STAKE XYZ COMPANYPurchase 300,000 shares for 5 150,000 Cash 150,000Costs of goods sold 107,896.65 Inventory 107,896.65Cash 327,677.23 Account Receivable 327,677.23PURCHASE INVENTORY AND COLLECTED RECEIVABLESInventory 204,531.75 Cash 204,531.75Cash 2011 AFN Budget and 5 Year targets 307,194.99 Account Receivable 307,194.99 22 | P a g e
  24. 24. Cash Flow per share 1.58 Performance Target 2010 Actual Scenerio 1 Scenerio 2 Scenario EPS $1.73 $3.22 $5.60 $1.46 Year-end stock price $13.88 $25.79 $70.00 $13.14 Profit margin (PM) 15.35% 3.66% 6.36% 11.24% Sales/Assets (Assets turnover) 0.98 1.82 1.98 1.21 Assets/Equity 1.58 2.01 1.74 2.68 ROE 15.0% 13.4% 21.9% 36.4% Operating costs/Sales 39.0% 92.0% 87.5% 50.5% L/A:Debt ratio 0.0% 50.2% 42.5% 57.8% TIE ratio 1.72 4.22 6.60 1.61 For 2011, the company target EPS is 1.46 resulting from an increase in operating assets to support a sales growth of 15 percent leading to a slight decrease in the stock price. To support the increase in operations the company plans to extend their debt ratio, and reduce the amount of cash on hand to 5.3 percent of sales. Receivables are currently 29.5 percent of sales and management is requesting for a decrease of 4 percent. To support increase in growth the company require additional funds of 607, 587 million, reduce to 140,771 million by deducting retained earnings from 2010 of 466,816 million. This includes an increase in inventory by 14 percent, and an increase in assets by 7 percent to support an expansion project and upgrades to machinery. % o 2010 Actual % of Sales Factors f Forecast 2011 Forecast 2012 Forecast 2013 Forecast 2014 Forecast 20152010 Income Statement -$335,544.3 -$335,543.3 -$335,542.3 -$335,541.3 -$335,540.3Sales $3,390,776.1 15.00% (1 + Factor) × 2010 Sales $3,899,392.52 $4,484,301.39 $5,156,946.60 $5,930,488.59 $6,820,061.88Total operating costs 1,323,415.8 50.5% Factor × Forecasted Sales 1,969,193.22 2,264,572.20 2,604,258.03 2,994,896.74 3,444,131.25EBIT $2,067,360.3 $1,930,199.29 $2,219,729.19 $2,552,688.57 $2,935,591.85 $3,375,930.63Interest charges 1,200,000.0 10.0% Carry over 2010 amount 1,200,000.00 0.10 0.00 1,200,000.00Earnings before taxes (EBT) $867,360.3 $730,199.29 $2,219,729.09 $2,552,688.57 $2,935,591.85 $2,175,930.63Taxes 346,944.1 40% Tax rate × 2011 EBT 292,079.72 887,891.64 1,021,075.43 1,174,236.74 870,372.25Net income for common (NI) $520,416.2 $438,119.58 $1,331,837.45 $1,531,613.14 $1,761,355.11 $1,305,558.38Dividends (DIVs) $50,348.3 0.0% $0.00 $0.00 $0.00 $0.00 $0.00Add. to ret. earns (NI – DIVs) $470,067.9 $438,119.58 $1,331,837.45 $1,531,613.14 $1,761,355.11 $1,305,558.38Shares outstanding 300,000.000 300,000.000 300,000.000 300,000.000 300,000.000 300,000.000EPS $1.73 $1.46 $4.44 $5.11 5.871183705 $4.35DPS $0.17 $0.00 $0.00 $0.00 $0.00 $0.00Stock Price $13.88 9.0 $13.14 $39.96 $45.95 $52.84 $39.17 Additional Assets $ 607,587.97 Additional Funds Needed $ 140,771.79 23 | P a g e
  25. 25. Forecasted Balance Sheet Innovation 2011 2012 2013 2014 2015Balance Sheet 2010 Forecast Forecast Forecast Forecast Forecast Assets Cash $3,671,348 # $206,667.8 $237,668.0 $273,318.2 $314,315.9 $361,463.3 Accounts receivable 1,000,000 # 949,128.4 1,091,497.6 1,255,222.2 1,443,505.6 1,660,031.4 Inventories 204,532 # 779,878.5 896,860.3 1,031,389.3 1,186,097.7 1,364,012.4 Total current assets $4,875,880 $1,935,674.7 $2,226,025.9 $2,559,929.7 $2,943,919.2 $3,385,507.1 Net fixed assets 600,000 # 1,582,436.1 1,121,075.3 1,289,236.7 1,482,622.1 1,705,015.5 Total assets $5,475,880 $3,518,110.8 $3,347,101.2 $3,849,166.4 $4,426,541.3 $5,090,522.5 Claims on Assets Accts payable and accruals $804,532 # $2,339,635.5 $2,690,580.8 $3,094,168.0 $3,558,293.2 $4,092,037.1 Notes payable: Original 804,532 -1,941,631.3 0.0 Notes payable: New 607,588 -471,484.0 -1,803,439.3 -786,250.2 -792,564,273.9 Total current liabs $1,868,151.5 $887,141.6 $366,286.5 $3,558,293.2 -$788,472,236.8 Long-term debt 0 0.0 0.0 0.0 Total liabilities $0 $1,868,151.5 $887,141.6 $366,286.5 $3,558,293.2 -$788,472,236.8 Common stock 3,000,000 300,000.0 300,000.0 300,000.0 300,000.0 300,000.0 Retained earnings 466,816 2010 + Addn to RE from Income Statement 904,935.8 1,769,957.0 2,863,450.6 3,292,968.3 3,066,913.5 Total common equity $3,466,816 $1,204,935.8 $2,069,957.0 $3,163,450.6 $3,592,968.3 $3,366,913.5 Total Claims $3,466,816 $3,073,087.3 $2,957,098.6 $3,529,737.1 $7,151,261.4 -$785,105,323.3 The self-supporting growth rate is 9.7 percent meaning, this is the growth the company can obtain without raising additional capital. The company 5 year target is to grow by 15 percent a year from their current projected 10 percent growth from 2010. To obtain the results the company will obtain additional capital to increase sales by focusing on receivable collections, inventory management, and a marketing campaign to target the early adopters to late majority. Supporting Rate 9.72% 24 | P a g e
  26. 26. ExpansionThumbs Up Corporation is considering expanding globally in South America and India. Currently, theirproducts are manufactured in china and the assembled in the United States. One expansion project willinclude a small manufacturing and large assembly plant in India where products will be shipped and soldto outlets in Europe, Mideast, and Asia. Another project is opening a manufacturing and assembly plantin South America. With rising oil price and increasing transportation costs, thumbs up corporation hopeto utilized more manufacturing resources at home and in south America however at this time thecompany must rely on china to manufacture more than 85 percent of their materials and reap thebenefits of reduce labor costs. Considering the Chinese economics the company does not plan toassemble and sale any products out of china. The India project will require a total investment of 880,000 which includes equipment, buildings, salesoutlets, and goodwill funds to lock in contract negotiations. The internal rate of return is projected tobe 35 percent and 7 percent reinvestment of cash flows. The average price across all regions is projectedto be 69.99 and variable costs of 21 per unit. Pakistan Transportation ContractPakistan have a huge influence in the middle east and transporting final goods and materials withPakistan assistance could cut transportation costs and provide an influence into the middle easternmarket. The company will be seeking to lock in a transportation contract with Pakistan. 25 | P a g e
  27. 27. India ProjectIndia Project Squared Deviation Sales Unit Variable Times Scenario Probability Price Sales Costs NPV Probability Best Case 25% $89.99 42,000 $18.00 $4,077,665 1019416 Base Case 50% $79.99 26,000 $20.00 $311,181 155590 Worst Case 25% $59.99 800 $25.00 ($4,210,027) (1052507) 122500 Expected NPV = sum, prob times NPV 122,500 Standard Deviation = Sq Root of column H sum 350 Coefficient of Variation = Std Dev / Expected NPV 0After reviewing the India Project, Thumbs up corporation excluded the worst case scenario and decidedto select the base case with a 50 percent probability of success. The first year of sales is projected to be26,000 units with a Net present value of 311,181. The payback period for their investment is two yearswith an internal rate of return of 35 percent. Licensing PatentThumbs Up Corporation will be licensing their patents to businesses in the area where they are unableto sell their products 26 | P a g e
  28. 28. India ProjectInvestment Expansion Project India NPV = $1,083,629 Equipment cost $120,000 Outlets 480,000Equipment ($880,000) Key Output: IRR = 74.8% Building Costs 220,000 All Regions MIRR = 37.7% Goodwill contract funds 60000 Operating Cash Flows over the Projects Life: 2011 2012 2013 2014 2015 2016 2017Europe Sales 3,000 3,330 5,000 5,550 5,000 5,550 5,000Middle East 4,000 4,440 5,000 5,550 5,000 5,550 5,000China 10,000 11,100 10,000 11,100 10,000 11,100 10,000Japan 5,000 5,550 1,000 1,110 1,000 1,110 1,000South Korea 4,000 4,440 1,000 1,110 1,000 1,110 1,000Units sold 26,000 28,860 32,035 35,558 39,470 43,812 48,631Sales price $79.99 $82.39 $84.86 $87.41 $90.03 $92.73 $95.51Variable costs $20.00 $20.60 $21.22 $21.85 $22.51 $23.19 $23.88Sales revenue $2,079,740 $2,377,767 $2,718,501 $3,108,062 $3,553,447 $4,062,656 $4,644,835Variable costs 84,600.00 87,138.00 89,752.14 92,444.70 95,218.05 98,074.59 101,016.82Nonvariable operating costs 2,119,500 2,183,085 2,248,578 2,316,035 2,316,035 2,316,035 2,316,035Depreciation (equipment) 168,000 268,800 159,600 100,800 697,200 0 0Oper. income before taxes (EBIT) ($292,360.00) ($161,256.26) $220,571.03 $598,782.29 $444,994.21 $1,648,546.65 $2,227,783.03Taxes on operating income (40%) (116,944) (64,503) 88,228 239,513 177,998 659,419 891,113After-tax operating income ($175,416) ($96,754) $132,343 $359,269 $266,997 $989,128 $1,336,670Add back depreciation 168,000 268,800 159,600 100,800 697,200 0 0 Operating cash flow ($7,416) $172,046 $291,943 $460,069 $964,197 $989,128 $1,336,670 Terminal Year Cash Flows:Required level of net working capital $103,987.00 $118,888 $135,925 $155,403 $177,672 $203,133 $232,242Required investment in NWC $96,571 $290,935 $427,868 $615,472 $1,141,869 $1,192,261 $1,568,912 Terminal Year Cash Flows:Net salvage value 279,320 0Net Cash Flow (Time line of cash flows) ($880,000) $193,142 $581,869 $855,735 $1,230,945 $2,283,738 $2,384,522 $3,137,823Payback (See calculation below) 2.30 3Data for Payback Years 0 1 2 3 4 5 6 7Net cash flow (880,000) 193,142 581,869 855,735 1,230,945 2,283,738 2,384,522 3,137,823Cumulative CF 0 (686,858) (104,989) 750,746 1,981,691 4,265,429 6,649,951 9,787,774Part of year required for payback 1.28 27 | P a g e
  29. 29. South America ProjectSouth America Project Sales Unit Variable Scenario Probability Price Sales Costs NPV Best Case 25% $79.99 30,000 $19.00 $3,713,104 Base Case 50% $69.99 9,000 $25.00 $409,816 W orst Case 25% $49.99 200 $31.00 ($576,089) Expected NPV = sum, prob times NPV $989,161.72 Standard Deviation = Sq Root of column H sum $994.57 Coefficient of Variation = Std Dev / Expected NPV 0.00 Thumbs Up Corporation has chosen to accept the Base Case Scenario yielding a net present value of 409, 816 with a 50 percent probability of success. The average Unit price is 69.99 per unit and the company expects sales to reach about 700,000 in the first year. Licensing Patent Thumbs Up Corporation will be licensing their patents to businesses operating in some regions. South America Project 28 | P a g e
  30. 30. Investment Expansion Project South America NPV = $529,748 Equipment cost $120,000Equipment ($120,000) Key Output: IRR = 128.6% All Regions MIRR = 73.0% Operating Cash Flows over the Projects Life: 2011 2012 2013 2014 2015 2016 2017Units sold 9,000 9,990 11,089 12,309 13,663 15,166 16,834Sales price $69.99 $72.09 $74.25 $76.48 $78.77 $81.14 $83.57Variable costs $9.00 $10.04 $10.34 $10.65 $10.97 $11.30 $11.64Sales revenue $629,910 $720,176 $823,377 $941,367 $1,076,265 $1,230,494 $1,406,824Variable costs 381,510.00 425,701.58 438,472.62 451,626.80 465,175.60 479,130.87 493,504.80Nonvariable operating costs 225,000 231,750 238,703 245,864 245,864 245,864 245,864Depreciation (equipment) 24,000 38,400 22,800 14,400 99,600 0 0Oper. income before taxes (EBIT) ($600.00) $24,324.53 $123,402.22 $229,476.94 $265,626.07 $505,499.61 $667,455.48Taxes on operating income (40%) (240) 9,730 49,361 91,791 106,250 202,200 266,982After-tax operating income ($360) $14,595 $74,041 $137,686 $159,376 $303,300 $400,473Add back depreciation 24,000 38,400 22,800 14,400 99,600 0 0 Operating cash flow $23,640 $52,995 $96,841 $152,086 $258,976 $303,300 $400,473 Terminal Year Cash Flows:Required level of net working capital $31,495.50 $36,009 $41,169 $47,068 $53,813 $61,525 $70,341Required investment in NWC $55,136 $89,004 $138,010 $199,155 $312,789 $364,824 $470,814 Terminal Year Cash Flows:Net salvage value 335,320 0Net Cash Flow (Time line of cash flows) ($120,000) $110,271 $178,007 $276,020 $398,309 $625,578 $729,649 $941,629Payback (See calculation below) (441.80) 3Data for Payback Years 0 1 2 3 4 5 6 7Net cash flow (120,000) 110,271 178,007 276,020 398,309 625,578 729,649 941,629Cumulative CF 0 (9,729) 168,278 444,298 842,607 1,468,185 2,197,834 3,139,463Part of year required for payback 12.33 29 | P a g e

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