Current Net Assets of Eli = 50% of 700000 = $350,000
Current Sales = $700,000
Projected Sales = $1,560,000
Increase in Sales = 1,560,000 - 700,000 = $860,000
Projected Net Assets of Eli = 50% of 1,560,000 = $780,000
Increase in Net Assets of Eli = 780000 - 350000 = $430,000
Return on sales = 9% of $1,560,000 = $140,400
Assuming that after incurring all the expenses,Elli will have this much of cash remaining with her. So her Cash Position will be as follows :
Current Cash Position = $120,000
Projected Cash Position = 120,000 + 140,400 = $260,400
So Answers =>
A) His Projected Cash outflow is $260,400. If he can buy Jaguar and luxury townhouse from this Cash, then it would be okay. However, it is unlikely that Jaguar and luxury townhouse could be purchased from this amount. Hence answer is NO
B) Projected Cash Balance = $260,400
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