Financial Feasibility of Flying Cars
Name
Institution
Total Startup Cash Needed (to Make First Sale)
Capital Investments Amount
Capital Investment Amount ($)
Property 1,125,000
Furniture & Fixtures 1,131,000
Computer Equipment 1,150,500
Other Equipments 1,120,000
Vehicles 1,170,000
TOTAL 5,696,500
Feasibility Analysis
Operating Expenses Amount
Operating Expenses Amount Amount ($)
Legal, accounting, and professional services 12,000
Advertising and promotions 15,500
Deposits for utilities 115,500
Licenses and permits 112,000
Prepaid insurance 153,000
Lease payments 124,000
Salary and wages 148,000
Payroll taxes 118,500
Travel 12,500
Tools and supplies 15,000
Starting inventory 110,000
Cash (working capital) 1,200,000
Miscellaneous Expense 17,200
Total Startup Cash 2,152,000
Comparison of the Financial Performance of Proposed Venture to Similar Firms
Assessment Tool
Annual Sales
Sales Year 1 Year 2
Annual Sales 1,395,000 3,348,000
Comparison with HYPERLINK “http://www.google.co.ke/url?sa=t&rct=j&q=&esrc=s&source=web&cd=8&cad=rja&ved=0CH4QFjAH&url=http%3A%2F%2Fblogs.wsj.com%2Fspeakeasy%2F2013%2F01%2F23%2Fterrafugia-flying-car-is-fast-as-a-porsche-at-stopping%2F&ei=DnOFUpjzLbTA7AbH7oHABw&usg=AFQjCNFODJTl_zNh8aJPxWjnyKaQKW07rA&sig2=kLpM0-UEjAmcdQ_JGMAeNQ&bvm=bv.56643336,d.ZGU” Terrafugia
Terrafugia 2011 2012
Total Sales 13,950,000 12,624,000
The company estimates that each flying car would be sold at the prevailing market prices that is current at $279,000
In the first year of operation, the company targets selling 5 flying cars only and the number is expected to rise to 12, thus generating $3,348,000 sales revenue during the second year of operation. The company’s market share is expected to increase in the coming years and therefore more revenue will be generated from its sales.
Being a new company in the industry, it would be very hard for the firm to break-even especially over the first few years of its operations. The company must therefore be ready to spend more resources in promoting and advertising its new flying cars in order to gain market penetration. The limited but potential market is currently dominated by others manufactures with strong and sound financial strengths, hence relying on their economies of scale to restrict entry of new firms. For this reason new errant must spent more financial resources on its operations thus the $2,152,000 allocated for operational expenses of the firm.