Assumption.docx

FINANCIAL FEASIBILITY A. Major Assumption Used The following assumptions are used for the preparation of financial statements, cash flows and income statement to evaluate the financial performance of the business. 

The sources of capital are from the owners/manager.

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Useful life of stall is five (5) years; and Machineries and Equipment is ten (10) years.

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Salaries expense will remain constant for 3 years and will increase by 5% beginning in the fourth year.

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Raw materials are not consistent and considered as a variable cost.

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Sales is based on market research and projected demand and on a cash basis.

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Rent Expense will remain constant for 5 years.

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Advertising expense will decrease by 10% every year.

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Supply will increase 2% yearly.

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Tax is payable the following year.

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Utilities will increase by 2% yearly.

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Supplies will increase 2% yearly.

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There is no additional investment or withdrawal for the period of five (5) years.