Prepare a cash flow forecast

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Reference no: EM13171938

Use the information in the Butterflies case material to:

1. Prepare a cash flow forecast. Assume that the business will be run for 6 years, and then the building will be sold for 300,000. The equipment will be depreciated straight line over the life of the restaurant. The tax rate is 30%.

2. If the required return of the investors is 14% should the expansion proceed?

3. Conduct a sensitivity analysis which explores the impact on the viability of the project of:
a. The level of sales
b. The cost of food as a percentage of sales and
c. Working capital as a percentage of sales

4. Write a report to Lisa and Mark which uses your answers to 1, 2 and 3 as the basis for a recommendation on the investment.

Reference no: EM13171938

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