Question: OBJECTIVE: You need to demonstrate your ability to identify how firms raise funds through the use of debt, equity, and retained earnings.
BACKGROUND: Your client, SmartClean, Inc., is a cleaning service for office and industrial locations.
SmartClean has been in business for 5 years and has shown steady revenue growth each year.
The owner originally started the business using a business loan.
The owner has $10,000 remaining on the loan after steadily making payments and has an excellent personal and business credit history.
The owner wishes to:
1) Expand the SmartClean business into three new territories,
2) Needs an infusion of capital, and
3) Is looking for $50,000 in order to make the expansion.
The expected fixed costs for the current business and expansion is $75,000.
SmartClean's average charge per job is $250.00.
The variable costs per job is $35.00.
ASSIGNMENT: Write a 5-page, APA formatted PROPOSAL that includes the following parts:
1) Summary of client needs
2) Advantages and disadvantages of debt financing
3) Advantages and disadvantages of equity financing
4) Recommendation for a financing strategy for SmartClean
5) Complete breakeven analysis (based on given price analysis and cost)