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Your brother-in-law has asked you to help him finance what he...

Your brother-in-law has asked you to help him finance what he considers to be a ―great opportunity.‖ He plans to sell a new brand of European clothing that is becoming popular in the United States. He thinks that a location close to the nearby university, from which you both graduated, would be ideal. He estimates that the financing could come mostly from a bank loan and credit from suppliers. However, together you would need to put in $5,000; he'd invest $3,000, leaving you to invest the remaining $2,000. It's not that you don't trust him, but you have decided to undertake your own investigation into the opportunity. After considerable effort, you have developed what you think are realistic estimates of the potential profitability for the venture. You have also estimated how much money it would take to start the business. There's a slight problem, however: Your six-month-old puppy tore up your worksheets. After putting the dog in the backyard, you pick up the pieces and begin reconstructing your work. The remnants of your hard work are as follows: Advertising expense $16,000 Inventories $14,000 Interest expense $1,000 Cash needed in the business $6,000 Equipment $10,000 Sales $75,000 Cost of goods sold $40,000 Rent $4,000 Accounts payable $6,000 Office overhead $14,000 Depreciation expense $10,000 90-day bank loan $10,000 As you let the dog back into the house, you try to remember how all the pieces fit together. Once you have organized the information, what will you conclude about your brother-in-law's ―great opportunity‖? What you will study in this course will help you decide if your sister married an entrepreneur in the rough or if he should keep his day job and forget about becoming a business owner. So, read on to see if you should join him as a partner in the business. (Notes: Makes a Projected Income Statement & Projected Balance Sheet to help you make a decision)

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