Liz and Luke have recently decided to open a pastry shop in Baltimore. They have a cousinwho is willing to invest $420k into their business. Although Liz and Luke are amazing generalmanagers and have...

Liz and Luke have recently decided to open a pastry shop in Baltimore. They have a cousinwho is willing to invest $420k into their business. Although Liz and Luke are amazing generalmanagers and have found an incredible Pastry Chef, they need assistance in managing theoverall finances of the Company.Using the following to create 5 years of projected financial statements (I/S, Cash flow, and Bal.Sht) assuming the investor would like to be considered an owner in the company.● Possible initial investment: $420,000 cash● Monthly rent in Baltimore: $4,850 and increases 5% a year● Estimated start up costs to set up the bakery (Decor, kitchen supplies, etc): $175,000(90,000 of these are depreciable over 6 years) the rest is immediately expensed● Furniture costs to ready the space for customers (in addition to start up): $45,000(assume estimated useful life for GAAP is 5 years)● Year 2 and year 3: There is a plan to upgrade kitchen appliances/bakery motif each yearwith a budget of $34,500 a year (estimated useful lives of 10 years). Leasing optionsmay be available● Estimated annual revenues from sales are $415,000 the first year, $680,000 the secondyear and anticipated growth 2.5% each year following.● Annual salary and benefit expense (not including a salary for Liz and Luke’s investedtime) estimated at $150,000 a year● Annual cost for food, supplies, utilities is $350,000 in year one but expected to lower to$280,000 in subsequent years● Amounts above are before interest, depreciation, and taxes (Liz and Luke need helpestimating)● Tax Rate is 21% (not including baltimore city taxes)● Market interest rate for a small business owner is 6%PART I - Work with your group to create 5 years of income statement, balance sheet, and cashflow statements. The key is to ensure your financials balance each year and make sense.Think about things in the form of journal entries. As one group, provide your financials in aspreadsheet. Everything should be clearly labeled and laid out. Use links as much as possibleand formulas so as you make changes everything updates.