 Hey guys, it's MJ and this is episode 3 of the financing model and what we've added in now is the equity element. So how I've got it now is that the equity sold would be 20%. So whatever profit you receive, 20% of it will go to the investor in dividends. But the nice thing about getting equity is that you can build your asset or your new bar, in this case we're dealing with beer, so that you can get your extra monthly sales. So even with taking say 20% of that additional profit, we're going to be seeing it's slightly better than going the self financing route. If you want to know more about the self financing route or the orange line which represents the loan, please check out episode 1 and episode 2. So what we have here at the moment is like I said 20% is being sold and these conditions we're seeing that the final answer is that equity is the best option. And what I'm doing is I'm just looking at the bank balance after five years. So after five years we can see equity is comfortably in the lead. Although interestingly enough, equity has the lowest profit near the end. So that's something that you're going to want to consider. If we had to extend this say to 10 years or 20 years, then equity might not be the best. So it is very term sensitive. But let's have a little bit of fun. Let's say and this is showing how much that they're paying, the investors are paying and how much they're receiving and that is dependent on the price of the new asset and the number of assets that they buy. So if we had to increase that to two new assets, we can see all the values change we can see that the equity is still the best option. But you can check the annual rate of return is actually goes down to only 11%. But if we say increase the extra monthly sales to say 5,000, we'll see that that average annual return does increase. So there we go. I just want to check one thing. Yeah, it is changing the amount of beer sold depending on the number of new assets you get. So what if our investors are, let's change back to one extra bar. Let's say our investors are quite greedy and they want say 25% of the business for this 3 million round investment. We can see, oh look at that, equity is still the better one. Let's make it 50%. Okay, so under 50% we see that the loan now is the best option. The average annual return that the investor would get is 44%, that's quite huge. And so is equity better? No. And you can see here on the graphs the profit because we're basically giving 50% of it away is less than the cell financing even with the additional beer. And here we can see that equity is way below the other two. But like I said, 50% is quite high. But this is the amount that we can play with. So we go to an investor. So as a store owner you would say, let's say maybe it costs say 5 million. I always get confused with how many zeros I'm putting in there. Is that enough? 5 million and let's say it's going to give me 6,000 extra sales of beer and that I need an additional two of these things. Then what you will be doing is coming to the investor saying, I need 10 million. What percentage of equity do you want for 10 million? And the investor will come up with a number and say 30%. And then you look at the model and you say, well hey, hang on, that actually works for us. Over a course of five years. Then the investor will say, well, I'm getting 17% return. I'm happy with that as well. So both the investor and the store owner can use this model to determine if it's a good enough investment for them. So the investor will be looking at the output share. We'll be saying, I have to invest that amount. And this is how much I'm getting back over a five year period. The input will be the amount that the investor wants. And the red values over here will be the store owner's amount that he's going to be putting in. What he thinks the business is going to perform. And then the shop owner will be looking, or business owner will be looking, okay, your equity is best, is better than cell financing, and it is better than going the loan route. Although look, if we made, let's say the loan zero and we increased the amount of equity that they wanted, let's say to 45%. Then you could say, well, hang on a second. As an investor, yes, you're going to be getting 25%, but it makes much better sense for me to go with the loan. So thank you for your money, but I'm not going to accept it. We're going to go with the bank instead. And then the investor will be like, no, no, wait, wait, wait. Maybe we'll give you 40, we'll just do it for 40%. And then you type it in and you're like, no, then 35%. And then you can be like, okay, that's my deal. But you can see, you can use this as a negotiating tool between the investor and the shop owner. So you can almost be like a mediator if you have this model. You can sit between the investor, the bank, and the business owner and say, hey, this is what the outcome is going to be. Are you happy with that return? And this is giving advice to the shop owner. But remember, these are models. It is deterministic. I mean, in real life, there will be a stochastic element. Profit will not be fixed every month. You will have good months. You will have some bad months. So there will be that volatility involved, which this model doesn't capture just because it's used to just be a decision-making tool and just help with the decisions. And it would make it too complicated if we did add in a stochastic element. So I have kept it deterministic with the expected values. And that is the equity element. But we still have one last one to do. And that is, remember, you can raise money through a loan or through an equity or through something called crystallization and the blockchain. So stay tuned for that part of the model, which we will be showing you. And I hope you guys have enjoyed this video. Feel free to ask any questions in the comment section below. I will not, however, be giving out this Excel spreadsheet because it probably will go on sale. And this is how I earn money in order to feed myself. So don't ask for the Excel code unless you prepare to pay for it. Other than that, ask as many questions as you want, and I will respond if I can. Thanks, guys. Cheers.