Applied business mathematics (Financial Plan) Number

Appliedbusiness mathematics (Financial Plan)

Number:

Appliedbusiness mathematics (Financial Plan)

Startinga business has become a complex initiative. However, with effectiveplanning the task becomes easy and achievable. This in turn explainswhy it’s always vital to have adequate planning before starting anybusiness enterprise. Starting a business entails planning, completinglegal activities as well as making financial among other keydecisions (Anthony&amp Biggs, 1997).Some of the essential aspects of starting a business are writing up abusiness plan, choosing the location, financing the business,determining the legal structure among other initiative until thebusiness is fully operational. This paper is a representation of afinancial plan addressing the financial aspects of starting abusiness after graduation that requires an estimated amount of$50,000.

FinancialPlan to raise $50,000 for launching and supporting businessoperations

Financialresources are very essential whether it’s starting a new businessor supporting an existing one. Financing is needed to start up abusiness and ramp it up to profitability. However, for the case of anew business, it’s always challenging to raise the capital for theprocess, but with adequate planning the capital can be realized. Thiscan be through personal contributions, loans, equity financing,lease, grants among other sources of funds. One of the major sourcesof funds includes debt financing, which entails bank loans (Slater&amp Wittry, 2014).

Inorder to have sufficient as well as affordable sources of financesfor starting the business, the type of banking chosen and loanarrangements plays a key element towards the funding of the business.The best loan arrangements for such a budget are the use of Microloanprogram. This provides short-term loans which would be sufficient tofinance the commencement of the business. Additionally, SmallBusiness Administration can also be implemented to finance thebusiness (Bhardwaj,2005).On the type of banking, retail banks should be the first or theinitial starting point. Retail banks offer basic banking serviceswhich are the requirement for the new business.

Exampleof loan calculations

Havingagreed with the ABC Bank to finance their business with the capital.The bank offered their loans for business start at a rate of 12%which will run for 2 years (24 months).

Amount Applied For ($)

50000

Interest Rate

12%

Loan Period (Months)

24

Monthly Payment ($)

2354

Totalinterest Payable ($) 6496

Taxesand Deductions

Inorder to adhere to the regulations and requirements, the business issupposed to pay taxes to the relevant bodies once its operationsbegin. Some of the key taxes which a business is supposed to payinclude income tax, sales tax, and self-employed tax among othertaxes. One tax that is remitted is the local business taxes whichdepend on the nature of the business (Anthony&amp Biggs, 1997).

Calculationof income tax

Assessable income

allowable deductions

=

taxable income(the amount you pay tax on)

Pricing,Commissions, Discounts, or Markups

Throughthe business operations, generations of interest is essential for thesurvival of any business. Different aspects are used to generateinterest in business include pricing, discounts, commissions markupsand mark downs. In the case of pricing, helps in marketing mix and inturn generating turn over for the business (Cox&amp Cox, 2006).Penetration pricing as well as competitive pricing are the bestapproaches to pricing of the business products. On the other hands,discounts are used to increase the amount of sales as well as attractand retain customers to the business example of this is the tradediscounts and cash discounts. The discount will affect the amount ofcash available through increase in the number of sales as well promptpayment by the creditors. Mark-up on the other is the differencebetween the wholesale and the retail price, and it’s used toestimate the expected profit margin. The four elements are used toestimate the amount expected by the business through sales volume(Bhardwaj,2005).

Acquiringof assets is an essential exercise for any business, in our case, thecomputer and an inventory (goods bought for resale) serves as some ofour initial assets for the new business establishment (Cox&amp Cox, 2006).The two will be acquired for the business whereby the inventory willbe purchased (purchases) however, one of the partners has agreed tolend his personal computer to the business for a span of one year.The stock represents good bought for resale. The inventory cost willbe recovered after sales are made. The computer cost will be treatedas a loan payable in a years’ time.

Assets

Liabilities

Cash

10000

Capital/loan

52000

Stock

20000

Computer

2000

Bank

20000

Technologyevolution has brought along immense transformation in the bankingsector through the use of technology invention and the internet inthe banking sector. In the business operations, technology andinternet will be used to make business transactions such as transferof funds to the seller, requesting of bank statements. Additionally,internet has become an essential tool in business communications andequally, the connation will be used to keep in contact with thecustomers as well as the suppliers. Moreover, the platform will alsobe implemented for marketing purposes (Slater&amp Wittry, 2014).However, despite the tremendous merits associated with the use oftechnology and internet in the business, the development isassociated with a number of limitations. Some of the risks associatedwith the use of the internet in banking and in the businessoperations include lack, hacking threats, privacy issues, increasefraud cases as well as legality of the platform, finally, there isintent security may not be guaranteed (Cox&amp Cox, 2006).Finally, the start cost is costly as well as its maintenance.

Quantitativefinance also known as mathematical finance is the aspect of appliedmathematics that is concerned with financial markets. Over the lastcouple of years the field has been essential as it entailsmathematical replicas and their exploration as they relate toproblems in financial operations. It helps in dealing with financialoperations in business management. Electronic banking entails the useof electronic means in transferring funds from one account toanother. Electronic money transfer has increased business operationsand buyers and sellers don’t have to move from one bank to theother and turn saving time for them. Moreover, reconciliation,payment plans for the employee and the loans, as well as financialmanagement of interest bearing loans will be computed within thebusiness financial files as well as liaising with the loaning bankfor reconciliation.

Costrecovery is the deduction of an asset portion that is in a businesstowards the generation of income over its time of use throughdepreciation, depletion or amortization. Amortization affectsintangible goods, while depreciation affects tangible goods.Depletion is the recovery cost of natural resources. The deductionsare allowed due to recovery of capital doctrine, which itself holdsthat, the return of the invested finances isn’t taxable (Gosling,1995).

Theintegration of mathematic concepts into the business has been throughdifferent mathematics aspects such as integration, matrix and evenprobability among others math’s knowledge. Probability distributionis a statistical simulation that shows the possible outcomes of aparticular event or course of action as well as the statisticallikelihood of each event the probability knowledge has had immensecontribution towards business sector. Probability knowledge is usedin scenario analysis, sales forecasting, and risk evaluation amongother determinations (Slater&amp Wittry, 2014).

ModelingI math’s is the process that entails choosing and using of theappropriate math’s and statistics in analyzing empiricalsituations, which in turn helps to improve decision making. Theprocess entails moving or translating problems from application totractable math’s formulas, so as to give answers and usefulinformation. The modeling process is applicable in numerous sectorssuch as in finance. In finance modeling helps in risk analysis aswell as volume estimations of options. Technology evolution hashelped improve the impact of math’s modeling process, in turnmaking it more useful in business operations.

References

Slater,J., &amp Wittry, S. M. (2014).&nbspMathfor business and finance: An algebraic approach.

Anthony,M., &amp Biggs, N. L. (1997).&nbspMathematicsfor economics and finance: Methods and

modelling.Cambridge [u.a.: Cambridge Univ. Press.

Gosling,J. (1995).&nbspMathsfor business &amp finance.Glebe, N.S.W: Pascal Press.

Cox,D. W., &amp Cox, M. A. A. (2006).&nbspThemathematics of banking and finance.Chichester,

England:Wiley.

Bhardwaj,R. S. (2005).&nbspMathematicsfor economics and business.New Delhi: Excel Books.

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