Example Of Cash Flow Research Proposal

The owner of the business will support the business using his own cash until the business can manage to sustain its operation. Therefore, this means that the business will need the owner’s support until it breakeven. The breakeven value of the restaurant is $758,333.33. However, having communicated the difficulty in raising such a huge amount, the owner managed to convince the financial institutions to finance the payroll costs and rent which were the two elements that were pushing the BEP value to such a high cost. Therefore, the financial agreed to loan the owner $561,850 while the owner is expected to raise $504,333 at the beginning of the business. In addition, the bank has agreed to loan the owner the loan amount at 3.49%, which is the prevailing market rate, on a reducing balance basis for ten years. As such, the owner is expected to pay $67,523.56 per year for the next ten years in order for the loan to be repaid. In addition, the owner will need to come up with other means of sustaining his life since he will not be allowed to draw from the firm for the first year.
In total, the amount, both from the bank and from the owner, that will be available at the start for the business is $1,066,183. The value is adjusted with the revenues that that the firm will generate during the year totaling to $756,000. However, since most of the capital expenditure will be incurred in the first year of operations, they are accounted by subtracting their respective value from the firm total cash available. In addition, there are other costs that are included namely, the stock and promotion for the first-day opening. These elements are further subtracted from the total cash of the firm to arrive at the total cash available at the end of the year amounting to $1,104,683.21 as shown in excel. However, one should note that depreciation is not included in the cash flow since it is a non-cash item. However, when computing the profits, it must be included.