Problem:
To compute the cost of expanding his existing business, Bob makes the following estimates:
Adjacent lot $40,000
Metal prefab building 25,000
Hydraulic lifts 15,000
Tools and equipment 9,000
Parts and inventory 5,000
Additional operating expenses 55,000
TOTAL $149,000
Required to do:
Question 1. Classify Bob's expansion estimates into the three categories of capital: (a) fixed capital requirements, (b) working capital requirements, and (c) growth capital requirements.
Question 2. Explain to Bob the possible (and realistic) sources of capital for expansion. Where would you recommend that he go for the funds he needs?