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.

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

years.

 Salaries expense will remain constant for 3 years and will increase by 5%

beginning in the fourth year.

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

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

 Rent Expense will remain constant for 5 years.

 Advertising expense will decrease by 10% every year.

 Supply will increase 2% yearly.

 Tax is payable the following year.

 Utilities will increase by 2% yearly.

 Supplies will increase 2% yearly.

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