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the amount of total income, outcomes, working capital and the indicators of success of the

company.

Tabel 1 The main indicators of the activity of the firm. Sourse: Own development

Production costs 30000 45000 50000 55000 60000

Formation expenses 300 0 0 0 0

Development costs 1500 1000 1000 3000 1000

Taxes 18900 29315 31110 32800 36200

Rents 6000 6000 6100 6100 6200

Expenditure on

machinery 5000 5000 6000 6000 3000

Consultancy in the

technological process 1000 0 0 1500 0

Logo and brand 200 0 0 500 0

Total costs 62900 86315 94210 104900 106400

Tabel 2 The structure of costs. Sourse: Own development

Income Tax 46220 61364,4 62133,6 41952 43808

Social Security 12500 14535 14790 15340 16120

Health Insurance 16250 18525 18850 19175 17050

Unemployment fund 1250 1425 1450 1475 1550

Pension Fund 39500 45030 45820 46610 48980

VAT 5000 5600 6000 6200 6500

Total taxes 120720 146479,4 149043,6 130752 134008

Tabel 3 The structure of the taxes. Own development

Figure 1: The structure of total taxes in 2013

Figure 5: The structure of total taxes in 2017

security insuran ent fund n fund

ce

2013 20% 5% 6,50% 0,50% 15,80 24%

%

2014 24% 5,10% 6,50% 0,50% 15,80 22%

%

2015 24% 5,10% 6,50% 0,50% 15,80 20%

%

2016 16% 5,20% 6,50% 0,50% 15,80 20%

%

2017 16% 5,20% 5,50% 0,50% 15,50 19%

%

Tabel 4 Fees provided by law for every year. Source: Law 31/1990

Romanian fiscal law provides the next rule of calculating the Net Profit:

Income Tax = Profit Tax Rate * Taxable Profit = Profit Tax Rate * (Total Income - Total

Expenses - Non-Taxable Income + Non-deductible Expenses);

Pension fund);

1.Cash Flow

Cash flow= Working capital- Total taxes

Working capital 130000 175000 180000 155000 160000

Total taxes 120720 146479,4 149043,6 130752 134008

Cash flow 9280 28520,6 30956,4 24248 25992

Tabel 5 The value of cash flow for each following year. Source: Own development

Figure 6: The evolution of Working Capital, Total Taxes and Cash Flow for each following year.

2.Oportunity cost

The initial investment in the company was 70 000 euro, untill the 5 years the company achieve

the value of Net Profit equal with 229992 euro, that mean that the company gains 159992 euro

producing and trading essencial oils.

Net Profit Initial Investment = Returns;

Returns = 229992 70000 = 159992(euro);

While if investors decided to place the money in a bank in condintions of 0.25% per year they

would have achieve the amount of 70879,38 m.u., that means that in 5 years they gains 879,38

m.u.

Sf= So(1+ q/100%)^n;

Sf- final amount of money;

So- initial sold;

q- rate of deposit;

n- number of years;

Sf=70000(1+0.0025)^5=70879,38 (m.u.);

Returns = Final amount - Initial Investment;

Returns = 879.38 (m.u.);

In this case is absolutely clear that the returns of investment in producing essencial oils is much

more than the money placement in a bank.

3.Returns on investment

For determinate the viability of the project for each following year a used next

formula:

ROI= 100

Amount of Investment

Incomes 184880 194320,6 196756,4 220248 229992

Investment 62900 86315 94210 104900 106400

ROI 194% 125% 109% 109% 116%

Tabel 6 The rates of viability of the project for each year

ROI ( total )= 100

Initial Investment ( 2013 )

22999270000

ROI ( total )= 100 =228,56

70000

NB! In both formula I used as a Incomes after Investment the Net Profit for each folowing year

which can be reinvest in next stage of production and the as a Initial Investment the total amount

of all costs for economical activity of the company.

4.Net Present Value

In the next table is represent the total amount of all inflows( incomes) and of all outflows(costs).

The diference between these 2 values is the Net Present Value.

Year 2013 2014 2015 2016 2017

Inflows 312900 371315 384210 399900 416400

Outflows 62900 86315 94210 104900 106400

Net present Value 250000 285000 290000 295000 310000

Tabel 7 The Net Present Value for each following year

Figure 3: The evolution of the Net Present Value for each following year.

Starting from the dates of the next tabel and the financil formula from Excell IRR we

determinated the internal rate of returns during of 5 years.

Monetary flux(2013) 250000

Monetary flux(2014) 285000

Monetary flux(2015) 290000

Monetary flux(2016) 295000

Monetary flux(2017) 310000

Internal Rate of return 367%

Also

Internal rate of return (IRR) is a metric used in capital budgeting measuring the profitability of

potential investments. Internal rate of return is a discount rate that makes the net present value

(NPV) of all cash flows from a particular project equal to zero. IRR calculations rely on the same

formula as NPV does.

The following is the formula for calculating NPV:

where:

To calculate IRR using the formula, one would set NPV equal to zero and solve for the discount

rate r, which is here the IRR. Because of the nature of the formula, however, IRR cannot be

calculated analytically, and must instead be calculated either through trial-and-error or using

software programmed to calculate IRR.

6. Payback

Proceeding from that fact that the initial investment was 70000 m.u. and the net profit in first

year is 184880 m.u., the payback period is less than 1 year, more exactly over 8 months. Not

considered the Time Value of Money.

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