For this part of the course project, you will demonstrate your ability to identify how firms raise funds through the use of debt, equity, and retained earnings.
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 expand the SmartClean business into three new territories, needs an infusion of capital, and 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.
To complete this assignment, write a 5-page, APA formatted proposal that includes the following parts:
- Summary of client needs
- Advantages and disadvantages of debt financing
- Advantages and disadvantages of equity financing
- Recommendation for a financing strategy for SmartClean
- Complete breakeven analysis (based on given price analysis and cost)
If you need assistance with using Microsoft Word, please visit the Video Tutorials page in the Course Materials folder.
Submit your completed assignment by following the directions linked below. Please check the Course Calendar for specific due dates.
Save your assignment as a Microsoft Word document. (Mac users, please remember to append the “.docx” extension to the filename.) The name of the file should be your first initial and last name, followed by an underscore and the name of the assignment, and an underscore and the date. An example is shown below: