Should the Scuba Business Dive into the Expansion

1. What are the advantages of the proposed dive shop?
2. What are the disadvantages of the proposed dive shop?
3. Project a pro-forma income statement, balance sheet, and statement of cash inflows and outflows for fiscal 1997 and 1998 forONLYthe new location, using the information presented in the case. Present the financials in Cayman Island dollars; do not translate into US dollars. The fiscal year starts June 1 and ends May 31.
   1. Clearly show how your projected your revenues. Hint: use the regression equation shown in exhibit 3 to project revenues, but not profits, and adjust for the circumstances of the new shop.
   2. State clearly any assumptions that you make to complete the financial statements.
4. In your opinion, should Don Foster open the new shop? Why or why not?

Ignore any foreign currency effects and income taxes.

Please round to the nearest dollar.