Section 5: Financial projections5.1 Basic assumptions and information5.1.1 Calculation of income and expensesCost and expenses are calculated based on the owner-manager’s knowledge and experience and from market research. For example, the prices of new equipments needed are sourced from the vendor’s Websites and sales brochures.To maintain a positive cash flow, all delivered products and services are payable within 15 days of receipt. No provision has been made on the impact of inflation, increase/decrease of interest rate, and/or increase of costs and prices.Depreciation of equipment items purchased is calculated using the straight-line method at 10 percent per annum of total initial outlay.Sale of books, audio CDs, DVDs and training manuals will be factored in the second year of operations as they are still under development.Only one year’s forecast has been provided. The forecast for the second year operations will be factored in the next update of this business plan due on September 2010.All figures are in Australian dollars (AUD$). 5.1.2 Business financingThe start-up expenses of the business are minimal. Most of the equipments and furniture’s are already in place. The business will be self-funding sourced from the founder’s income generating activities. Bank loans will not be required up to this point.The initial funding of the business will derive from training and assessment services currently provided to various RTO clients. The bank account required for the business is one that:Has cheque-writing facilities, telephone and Internet bankingProvides monthly bank statements (preferably online) for reconciliation with accountsHas low monthly account keeping feesHas credit card and electronic funds transfer facilities5.1.3 Distribution of profitsAll profits made by the business in the first year of operations will be retained in the business. Profits retained will be used to purchase/upgrade new equipments, education and professional development and/or to fund new marketing initiatives/business ventures.