Capital 2,110,000

Sales (Average of 3500 and 5000 258,500

Expenses 111,000 Utilities 39,000.00
Net Income 147,500 salaries 23,000.00
rent 24,000.00
ROI 0.070 internet 15,000.00
Payback period 14.31 Maintenance 10,000.00
Out-of-pocket 111,000.00
Annual Cash Flows
Terminal Cash Flow Depreciation 45,400.00 454,000
Cost of Investment 47,500.00 316,667
Net Present Value 39,500.00 131,667

448,333
 3,500.00 5,000.00
Unit (set) 660,000.00 850,000.00 3 years
Renovations 50,000.00 50,000.00
server 30,000.00 30,000.00 15 per hour
installation 30,000.00 45,000.00 20 per hour
Aircon 135,000.00 120,000.00
Furnitures and Fixtures 40,000.00 30,000.00
Printer 40,000.00
985,000.00 1,125,000.00 2,110,000.00

Salvage Value 30% of original price

52,000.00 6,600.00
55,000.00 7,500.00
50,000.00 10,500.00
INITIAL INVESTMENT Shop 1

Cost of PC units (set) Unit Unit Price Total

Unit 1 30 22,000.00 660,000.00
Unit 2
Unit 3
Printer 40,000.00
Server 30,000.00
Renovation Cost 50,000.00
Installation Cost 30,000.00
Aircondition 1 60,000.00 60,000.00
1 75,000.00 75,000.00
Furniture and Fixtures 40,000.00
Initial Investment 985,000.00

ANNUAL CASH FLOWS

Days of Average Daily Total

operation Sales
Sales 360 3,500.00 1,260,000.00
Out- of- pocket expenses
Utilities 246,000.00
Salaries 156,000.00
Rent 144,000.00
Internet 90,000.00
Maintenance 60,000.00
BIR 500.00
Business Permit 4,500.00
Total 701,000.00
Cash flow before tax 559,000.00
Depreciation 454,000.00
Profit before tax 105,000.00
Income Tax 37,800.00
Profit 67,200.00
Depreciation 454,000.00
Annual Cash Inflows 521,200.00

TERMINAL CASH FLOWS

Salvage Value
Unit 1 198,000.00
Unit 2
Unit 3
Terminal Cash Flow 198,000.00
 Shop 2 Payback Period

Unit Unit Price Total

20 25,000.00 500,000.00 Payback Reciprocal

10 35,000.00 350,000.00
-
30,000.00 Accounting Rate of Return
50,000.00
45,000.00
1 120,000.00 120,000.00 Net Present Value

30,000.00 Initial Investment

1,125,000.00 Annual Cash Inflows 2.577097
Terminal Cash Flow 0.793832
Net Present Value

Days of Average Daily Total

operation Sales Profitability Index
360 5,000.00 1,800,000.00 NPV Index

222,000.00 ASSUMPTIONS
120,000.00 It is assumed that the annual sales is constant for the next two y
144,000.00 very accessible to its cust
90,000.00
60,000.00 The PC units has a useful life of 3 years only because the operati
500.00 owner is willing to sell the units for about 30% of it
4,500.00
641,000.00 The useful life of the air conditioner is 15 years. And the Printer w
1,159,000.00 The owner pays monthly tax of 3% of profit and since the it is as
448,333.00 owner paid 36% of its annu
710,667.00
255,840.12 SHOP 1 15/hr
454,826.88 SHOP 2 20/hr
448,333.00
903,159.88

CONCLUSION
Shop 2 is a better investment since it recovered its investment fas
Shop 1.

150,000.00
105,000.00
255,000.00
 Shop 1 Shop 2
985,000.00 1,125,000.00
521,200.00 903,159.88
1.8898695318 1.2456266326

0.5291370558 0.8028087822

0.0682233503 0.40429056

985,000.00 1,125,000.00
1,343,182.95 2,327,530.61
157,178.78 202,427.22
515,361.73 1,404,957.83

1.52 2.25
0.5232 1.2489

es is constant for the next two years given that the location of the business is
very accessible to its customers.

3 years only because the operation of the business is from 6am to 12mn. The
ell the units for about 30% of its purchase price after three years

ner is 15 years. And the Printer will be depreciated the same with the PC units
3% of profit and since the it is assumed that the sales is constant monthly, the
owner paid 36% of its annual profit.

The price per hour in shop 2 is higher since it provides real gaming
chair, top notch headphones for the players and high quality
keyboards which players prefer when using the computer.

e it recovered its investment faster and its profitability index is way higher than
Shop 1.