Financial Feasibility of Flying Cars

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.