Reference no: EM133417400

Question: Sunny believes he can finally monetize on his abilities. With $3,000 worth of one-time advertising (brochures and social media ads), Sunny estimates that he canbook $200,000 worth of vacation activity in his first year. From this, he can chargea fee of 5%. While this wouldn't mean much money immediately, especiallyconsidering he would be spending about ten hours a week on the business, Sunnydoes believe he can double the $200,000 number in the second year once word-of-mouth really kicks in.
Then, he would be in a position to raise the fee to 6% and benefit from 10% year-over-growth for three years. After that, the fee would be raised to 7% at that pointwith flat revenues for the following five years. He has run some rough numbersand believes business expenses (mostly car-related) can be held to only 12% ofbusiness revenues with this plan- he hasn't considered borrowing costs yet, though.Luckily, Sunny has no student loan debt and pays a very low monthly rent to hisparents. However, that could change if he decides to start his own business- he hastalked to his bank and was offered a $15,000 line-of-credit at a 7.05% annual rate.He believes that, if needed, he can renegotiate the line-of-credit to $25,000, butmaybe with an 8% interest rate

Please tell which issue sunny is facing and what he should choose. is social media equity? please explain with calculation