Question

Let’s say IDEO decides to expand its unit of operations to include six (6) current offices across the globe in designing and delivering a new service called IDEO Globbie. This new service IDEO will provide will bring appreciable level of revenue. The estimated development cost of this new service is $12,000 for all the six locations. If the ramp-up and marketing support cost are estimated at $2,300 for each location. Calculate the estimated cash flow for the six (6) consulting service locations if the total revenue for the entire locations is $19,816. Will the new consulting firm break even, make profit or loss for this new service? NB: This is a single time period cash flow question

Answer 1

2,300* 6 = 13,800

Dev cost = 12,000

Total revenue for 6 locations = 19,816

So the estimated cash flow will be = 45616