Set up a car showroom

Requirements Estimate Of Business

Models
Showroom 15,000 sqft
Go Down 30,000 sqft Pradoo
Initial Costs Fortunerr
Initial Rennovation 2,500,000 Rs. Camryy
Deposit for Showroom (6
months rental) 13,500,000 Rs. Corollaa
Deposit for Go Down (6
Months Rental) 5,400,000 Rs. Innovaa
Rental Costs Etioss
Rent for Showroom 150 Rs./Sqft/Month Total Monthly Sales
Rent for Go Down 30 Rs./Sqft/Month
Staff Profit Calculations
Staff No. Salaries
manager 1 35,000 Rs./Month Revenues
Sales 3 25,000 Rs./Month y/y (%) growth
Admin 2 20,000 Rs./Month Rental - Showroom
Go Down 3 12,000 Rs./Month Rental - Go Down
Increament in Salaries 10% per year Salaries
Operations & Operations and Maintenance
Maintainance 15% As % of Revenues Expenses
Initial Funding Operating profit
Debt - For 5 years 50% Interest Expense
Interest Rate -
Commercial Loan 13% per year Profit Before Tax
Equity (Own Fund) 50% Tax @ 35%
Net Profit

Evaluate the proposal to run this business for 5 years by Cash Flow Calculations
investing 50% in the business
Operating Cash Flows/Net Profit
Initial Investment
Initial Funding Amount Debt amount raised / (repaid)
At the end of 5 years deposit
Debt Raised 10,700,000 amount would be returned
Equity Raised 10,700,000 Total Cash Flows
IRR
Debt %
 Number of Units Commission Commission
Price
Sold / month (%) (Rs.)
1 3,000,000 4% 120,000
12 2,200,000 4% 1,056,000
1 2,000,000 4% 80,000

10 1,200,000 3% 360,000

50 1,000,000 3% 1,500,000
50 700,000 3% 875,000
3,991,000
3,991,000

Y0 Year - 1 Year - 2 Year - 3 Year - 4 Year - 5

47,892,000 52,681,200 57,949,320 63,744,252 70,118,677
10% 10% 10% 10%
27,000,000 27,000,000 27,000,000 27,000,000 27,000,000
10,800,000 10,800,000 10,800,000 10,800,000 10,800,000
2,232,000 2,455,200 2,700,720 2,970,792 3,267,871

7,183,800 7,902,180 8,692,398 9,561,638 10,517,802

676,200 4,523,820 8,756,202 13,411,822 18,533,004
1,391,000 1,391,000 1,391,000 1,391,000 1,391,000

(714,800) 3,132,820 7,365,202 12,020,822 17,142,004

- 1,096,487 2,577,821 4,207,288 5,999,702
(714,800) 2,036,333 4,787,381 7,813,534 11,142,303

(FCFE) 2 3 4 5
Year- 0 Year - 1 Year - 2 Year - 3 Year - 4 Year - 5
- (714,800) 2,036,333 4,787,381 7,813,534 11,142,303
(10,700,000) - - - - -
- - - - - (10,700,000)
18,900,000
- - - - -
-10700000 -714800 2036333 4787381 7813534 19342303
30.23% Accept the Project

Interest Rate %
30% 10% 11% 12% 13% 14%
20%
25%
30%
35%
40%
45%
50%
55%
60%
 NPV
Investment Option 1

Year Cash Flow Dis Fact PV

0 -1000000 1 -1000000
1 300000 0.909090909090909 272727.3
2 200000 0.826446280991735 165289.3
3 200000 0.751314800901578 150263
4 300000 0.683013455365071 204904
5 350000 0.620921323059155 217322.5

PV 1010505.98878616
Cash O/F -1000000
NPV 10506 Manual Method
NPV 10506 Excel Method

IRR

Investment Option 1

Year Cash Flow Dis Fact PV

0 -1000000 1 -1000000
1 300000 0.909090909090909 272727.3
2 200000 0.826446280991735 165289.3
3 200000 0.751314800901578 150263
4 300000 0.683013455365071 204904
5 350000 0.620921323059155 217322.5

IRR 10.39%
NPV 0.00%
PV
Investment Option 2

Year Cash Flow Dis Fact PV

0 -600000 1 -600000
1 200000 0.909091 181818.2
2 200000 0.826446 165289.3
3 200000 0.751315 150263
4 150000 0.683013 102452

PV 599822.4
Cash O/F -600000
NPV -178 Manual Method
NPV -178 Excel Method

Investment Option 2

Year Cash Flow Dis Fact PV

0 -600000 1 -600000
1 200000 0.909091 181818.2
2 200000 0.826446 165289.3
3 200000 0.751315 150263
4 150000 0.683013 102452

IRR 9.99%
NPV $0.00
 Income Statement

Particulars Amt
Revenue from Operations 41600
- COGS (WN1) -21200
= Gross Profit 20400

- O&A (WN2) -5725

- S&D (WN2) -6125
= Operating Profit/EBIT 8550

+ Investment Income 900

- Finance Cost -1050
= PBT 8400

- Tax -3000
= PAT/NI/NP 5400
WN1 Method
Particulars Amt Cost
Purchase 22600 Depn Rate
Hire of Machinery 500 Depn Amt
Prod Wages 400
Depn 300
Op Inv 13000
Cl Inv -15600
Total 21200

WN2 Method
Particulars O&A S&D Cost
Admin Cost 5000 Depn Rate
Distribution Cost 6000 Depn Amt
Depn MV 125 125
iree Debt 600
Total 5725 6125
SLM
3000
10%
300

SLM
1000
25%
250
Balance Sheet

Assets Amt Amt

Non-current Asset 307520
-PPE WN1 307520
-Intangible Asset
-Investment

Current Asset 860000

-Inventory 320000
-Cash 180000
-Trade Rec 200000
-Pre payments 160000

Total 1167520

Equity & Liability

Equity 707520
-Share Capital 400000
-Share Premium 15000
-Retained Earning WN2 292520

Non Current Liabilities 80000

-Long Term Borrowings 80000

Current Liabilities 380000

-6% Loan 20000
-Trade Payables 280000
-Acc Exp 60000
-Tax Payable 20000

Total 1167520
WN 1 PPE
Particular P&M LF
Cost 150000 400000
Acc Depn -60000 -152000
Op BV 90000 248000

Purchase 20000 0
Disposal -25600 0
Adj Op BV 84400 248000

Method WDV SLM

Rate 20% 2%
Depn -16880 -8000
CL BV 67520 240000

Opening RE + Profit for the

CL Retained Earning
OP RE 122000
Profit 222000
Loss on Disposal -1600
Depn For the Year -24880
Tax -20000
Actual Profit 175520
Dividend Paid -5000
CL RE 292520
 Total
550000
-212000
338000

20000
-25600
332400

-24880 Book Value - SP =Profit/loss

307520 25600 - 24000 -1600

Opening RE + Profit for the Year - Dividend

 Cash Flow Statement

I. Operating activity Amt Amt

PBT 196
+/- Adjustments 82 Particular
Depn 59 Cash Paid

Loss on Disposal 9
Finance Cost 14 Cl Bal
Cash Flow before WC changes 278
Total
Working Capital Changes -4
-Inventories -2
-Trade Rec -8
-Trade Pay 6
Cash Flow after WC changes 274

Tax Paid in Cash (WN1) -57

Cash From operations 217

II. Investing Activity Amt Amt

Proceeds from disposal 6
Purchase -45
Cash from investment -39
Cash O/F
III. Financing Activity Amt Amt
Proceeds from share Capital 10
Proceeds from share Premium 6
Repayment of Loan -150
Dividend Paid -36
Int Paid in Cash (WN3) -12
Cash from financing -182

I+II+III (Flow In the Year) -4

+ Op Cash &Cash Eq 28
= Cl Cash & Cash Eq 24
WN1 Tax Payables
Dr Cr
Amt Particular Amt
57 Op Bal 35

Tax for the Year 62

40

97 Total 97

WN2 PPE
Dr Cr
Particular Amt Particular Amt
Op Bal 668 Depn 59
Purchases 45 Disposal 15

CL Bal 639
Total 713 Total 713

WN3 Tax Payables

Dr Cr
Particular Amt Particular Amt
Cash Paid 12 Op Bal 5
Tax for the Year 14
Cl Bal 7

Total 19 Total 19