Residents and their tastebuds
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- Table 5.1 Base case / Worst case / Best case Scenario variables
- Table 5.2 Base case / Worst case / Best case Scenario results
- Table 5.3 Summary of Financial Data
5.0 Financial PlanBased on the data presented in Appendix E, it appears that Gelato Mobile will make a profit in 2009 of about $7,100. The assumptions that contributed to this figure are listed in Appendix F. Conservative estimates were used in almost every situation. After analyzing the variables for revenues and expenses, it would appear that the most crucial variable is in fact sales. As noted in Table 5.1 and 5.2, under the worst case scenario, if sales drop 25%, the NPV changes substantially by $ 66,501, and becomes negative. Alternatively, under the best case scenario, if sales were 25% higher than planned, the NPV changes to $91,668. Table 5.1 Base case / Worst case / Best case Scenario variables
Table 5.2 Base case / Worst case / Best case Scenario results
Table 5.3 Summary of Financial Data
The NPV calculated for the base case noted above in Table 5.3 is based on projected net income for 5 years, plus a multiple of 3 in the fifth year (2013). To break even, Gelato Mobile will need $54,536 in revenue (to achieve $0 net income). Should projected revenues not be realized and Gelato Mobile cannot survive financially, the exit strategy is to simply close up shop. Gelato Mobile would simply sell remaining gelato at a discounted price and return the leased equipment. Worst case scenario, the Owners are out their initial investment of $2000 each, yet can chalk this business venture up to a social experiment in Saskatoon.
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