Key information

You have just attended the strategy session with your VSC management team, who are all incredibly excited about your company’s planned international expansion into Bigland!

During this session, you noted down the following in relation to your big expansion:

Bigland revenues

Management forecast the following new revenues from Bigland clients:

• New incremental recurring monthly fees of $50,000 per month from 1 January 20X4;
• Churn of $25,000 revenue per month from lost clients starting from 1 January 20X5;
• Annual new wins of $560k in 20X4, $30k in 20X5, $135k in 20X6 and $350k in 20X7. All of these wins will occur on 1 January within each respective year. Note that the figure is much higher on 1 January 20X4 due to this being the big launch date in Bigland!

All Bigland revenues generate a gross profit margin of 90%.

Monthly costs

VSC will incur the following incremental recurring monthly costs starting on 1 January 20X3:

Other items to note

All of Bigland’s accounting policies, tax rules and cash flows are the same as Homeland.