Brent and Den worked for several years as sales representatives for Xerox Corporation. During this time, they became close friends as they acquired expertise with the firm’s full range of copier equipment. Now they see an opportunity to put their experience to work and fulfil lifelong desires to establish their own business. The local TAFE College is expanding, and there is no copy centre within eight kilometers of the campus. Business in the area is booming—office buildings and flats are springing up, and the population of this section of the city is growing.
Brent and Den want to open a copy centre near the campus. A small shopping centre across the street from the TAFE has a vacancy that would fit their needs. Brent and Den each have $20,000 to invest in the business, but they forecast the need for $30,000 to renovate the store. Xerox will lease two large copiers to them at a total monthly rental of $4,000. With enough cash to see them through the first six months of operation, they are confident they can make the business succeed. The two work very well together, and both have excellent credit ratings. Brent and Den must borrow $80,000 to start the business, advertise its opening, and keep it running for its first six months.Required
Assume the roles of Brent and Den, the partners who will own the Copy Centre.
1. On behalf of Brent and Den write a loan request that Brent and Den will submit to a bank with the intent of borrowing $80000 to be paid back over three years. The loan will be a personal loan to the partnership of Brent and Den, not to the Copy Centre. The request should specify all the details of Brent’s and Den’s plan that will motivate the bank to grant the loan. Include a budgeted income statement for the first six months of the copy centre’s operation.