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Jack and Jill are small business persons who run a hot dog stand licensed to operate outside a business shopping district

Jack and Jill are small business persons who run a hot dog stand licensed to operate outside a business shopping district
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FINANCE

FIN 350 Module 1: Assignments

Chapter 2 Problems and Issues 7

7. Jack and Jill are small business persons who run a hot dog stand licensed to operate outside a business shopping district. They have been so successful that they believe a second hot dog stand in the area also would be profitable. The capital expense to set it up would be $10,000 and they are considering several options. Use a spreadsheet to evaluate these options by inserting (i) their receipts in column one; (ii) expenses in column two; (iii) change in financial assets in column three; and change in their debt in column (iv). State whether they would be a surplus-budget unit or a deficit budget unit under each option.
a. Their sales for the month turn out to be $12,000 and their expenses are $9,500; they borrow $10,000 for the new stand.
b. Their sales for the months turn out to be $15,000 and their expenses are $9,500; they sell $5,000 in stock and borrow the remaining funds needed to finance the new stand.
c. Their sales for the month turn out to be $8,000 and their expenses $9,500; they choose neither borrow any funds nor build the second stand.
d. Their sales for the month turn out to be $8,000 and their expenses $9,500; they use $5,000 in their bank account (with no other asset sales) to help finance the new stand.

 

FILE: MS WORD

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