You have founded a company to sell technology.

Prior to investing in your new company, an

investor has asked for a five-year income statement showing:

 Revenue
 Unit sales
 Total variable expenses
 Fixed expenses
 Profit before tax
 Marketing costs

Details about your company and business:

 You expect to sell 1,500 units of the technology products in the first year for $1,700
each.
 Since it’s a growing business, you presume to double unit sales each year for the next
five years.
 However, due to competition, it will force a 14% drop in selling price each year.
 Advances in technology allow initial variable manufacturing costs of $900 for each unit
to drop by 5% per year.
 Fixed costs are estimated to be $900,000 per year and the cost of marketing
expenditure is projected to be 10% of the annual revenue (total sales amount).
 Total costs are equal to fixed costs + variable costs.

Question:

 How many units (to the nearest 50 units) do you need to sell in the first year to break
even in the first year (profit before tax)?

More details:

 When it becomes profitable to do so, you will rent/lease an automated assembly

machine that cuts variable manufacturing costs by 15% but also doubles the annual
fixed cost, the new variable manufacturing cost will also drop by 6% per year.

Question:

 Ignoring tax considerations, build a spreadsheet for the venture capitalist.