Entre Gmetrix Lesson 2

The owners of a repair shop are assessing the amount of money needed to start a business at a new location. The owners have calculated that the business will generate more than enough revenue to cover monthly expenses after its second month in operation.

Start-up expenses are estimated as:

Equipment lease (monthly): $3000

Materials and supplies (monthly): $20,000

Licensing (annual but paid as a lump sum upfront): $200

Payroll (monthly): $12,000

Advertising (monthly): $1000

Operating expenses (monthly): $2000

One-time Security Deposit: $1000

Contingency (to cover 10% of start-up investment)

What is the amount of start-up capital the partners will need to open the new repair shop?

• $84,920

• $85.920

• $32,120

• $29,200

• $84,290

The owner of a food truck plans to sell tacos to employees in a large office complex. Before opening his business, the owner will need to obtain which of the following documents from each employee to verify they have completed a course in food handling safety?

• Certificate

• Pass

• License

• Zoning Variance

• Servsafe

An entrepreneur wants to become the sole proprietor of a sandwich shop. She has no experience operating a retail business, but has great recipes for sandwiches and has tested her recipes with friends. She applies for a business loan at a bank. The bank has a standard 40% debt ratio.

She estimates her expenses will be $4000 per month and income of $8000 per month.

Based on the estimates provides by the entrepreneur, will the bank approve her loan?

• No, because she has no experience

• No, because her debt ratio is too high

• Yes, because she will make twice as much as she needs to break even

• Yes, because her field test have had a positive result

• Yes, because she will make a profit of $4000

The owner of a pet supply store wants to expand her business and by boarding animals. She has designed plans to add a 30' x 60' kennel onto the back of her retail building. She has checked the zoning and discovered a kennel would be allowed on her property.

What will she need to obtain before adding the kennel?

• License

• Certificate

• Permit

• Zoning Variance

Which 2 options are benefits of using Angel Investors to help start a business? (choose 2)

• Angels do not share in the profits of the business

• The payback of the loan is predictable.

• Angels have no say in the management of the business.

• Angel investors do not expect to be paid until the business makes money.

• Angels accepts lower return on investment compared to other sources of equity.

A beekeeper wants to start a seasonal business renting hives to farmers to pollinate their orchards. The beekeeper believes the business will cover its own costs after 3 months, and that start-up expenses will be $18,000.

A. Estimates Start-up Expenditures:________

B. Contingency Amount (10% of A.):________

C. Start-up Capital (A. - B.):_______

D. Required Cash Reserve (50% of C.): _______

E. Total Financing Required (C. - D.):______

What is Total Financing Required by the Beekeeper?

• $18,000

• $19,000

• $36,000

• $29,700

• $27,900

Which 2 options are benefits of using Angel Investors to help start a business? Choose 2

• Angels do not share in the profits.

• The payback of the loan is predictable.

• Angel investors do not expect to be paid until the business makes money.

• Angels often accept a lower return on the investment compared to other sources of equity capital.

An entrepreneur discovers residents in a small rural area travel an average of 10 miles to shop at the nearest grocery store. The entrepreneur finds an old 2-story ranch house for sale located on a busy road in the center of the rural area. The entrepreneur determines the home could easily be converted to become a cute country store.

What will the entrepreneur need to obtain before proceeding?

• Permit

• License

• Certificate

• Zoning Variance

Jaden wants to start a seasonal snow-cone stand that after 3 months, his enterprise will cover its own costs. He needs $10,000 for initial expenses, plus a 10% contingency, and an additional 50% for cash reserves. How much does he need?

• $16,000

• $16,500

• $11,000

• $15,000

• $15,600

Grant wants to start a seasonal snow-cone stand that after 5 months, his enterprise will cover its own costs. He needs $16,500 for initial expenses, plus a 10% contingency, and an additional 50% for cash reserves. How much does he need?

• $16,000

• $16,400

• $26,000

• $26,400

• $26,600