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STAR TRADER’S

(INVESTMENT
APPRAISAL)
Business Idea 1
Initial Investment
An estimation of Initial investment required containing detail of one-off costs plus some
working capital requirement e.g.
ONE-OFF COSTS
Sr. ITEM Rate Qty Total
1. Advance Rent of office Rs. 50,000
2. STATIONERY AND OTHERS Rs. 40,000
4. COMPUTER Rs. 20,000 1 Rs. 20,000
TOTAL Rs. 110,000

WORKING CAPITAL
xx months’ operating expenses = Rs. 40,000 (w-2)

INITIAL INVESTEMENT REQUIRED = Rs. 110,000 + Rs. 40,000 = RS.


150,000
Source of Revenue Generation:-
BY PURCHASING AND SELLING A PRODUCT OF HAND WASH.

Potential Expenses:-
 FUEL
 SALE EXPENSES
 COMISSION

Schedule of Operating Inflows:- (W-1)


Year 1
(S.P * units sold per day * No. of days worked)
Month 1 90 × 12 × 25 = Rs. 27,000
Month 2 90 × 12 × 25 = Rs. 27,000
Month 3 90 × 13× 25 = Rs. 29,250
Month 4 90 × 13 × 25 = Rs. 29,250
Month 5 90 × 13 × 25 = Rs. 29,250
Month 6 90 × 13 × 25 = Rs. 29,250
Month 7 90 × 14 × 25 = Rs. 31,500
Month 8 90 × 15 × 25 = Rs. 33,750
Month 9 90 × 16 × 25 = Rs. 36,000
Month 10 90 × 16 × 25 = Rs. 36,000
Month 11 90 × 17 × 25 = Rs. 38,250
Month 12 90 × 18× 25 = Rs. 40,500
Total = 387,000
Year 2
(S.P * units sold per day * No. of days worked)
Month 1 90 × 18 × 25 = Rs. 40.500
Month 2 90 × 18 × 25 = Rs. 40,500
Month 3 90 × 19 × 25 = Rs. 42,750
Month 4 90 × 19 × 25 = Rs. 42,750
Month 5 90 × 19 × 25 = Rs. 42,750
Month 6 90 × 19× 25 = Rs. 42,750
Month 7 95 × 20 × 25 = Rs. 47,500
Month 8 95 × 20 × 25 = Rs. 47,500
Month 9 95 × 21 × 25 = Rs. 49,875
Month 10 95 × 21 × 25 = Rs. 49,875
Month 11 95 × 21 × 25 = Rs. 49,875
Month 12 95 × 21 × 25 = Rs. 49,875
Total = 546,500
Year 3
(10% growth over the year)
Total = 601,150
Year 4
(10% growth over the year)
Total = 661,265
Year 5
(10% growth over the year)
Total = 727,392
Note: - Following estimations are based on;
1. survey including 5 interviews details of which are attached in annexure
2. Industrial growth in the sector

Schedule of Operating outflows:- (W-2)

Year 1
(Cost per unit * No. of units sold)
Direct Costs = 40 × 1200 (w-1) = Rs.48,000
Other Expenses:-
1. Rent 15,000 × 12 = 180,000
2. Bills 8,000 × 12 = 96,000
3. Salaries 16,000 × 12 = 192,000
Total Rs.468,000
Grand Total = 48,000 + 468,000 = Rs. 516,000
Year 2

Grand Total = 49,500 (N-1) + 488,300(N-2) = 537,800


Year 3

Grand Total = 50,675 (N-1) + 488,800 (N-2) = 539,475


Year 4

Grand Total = 52,300(N-1) + 489,200 (N-2) = 541,500


Year 5

Grand Total = 53,000 (N-1) + 490,750 (N-2) = 543,750


Notes:-
1. Estimations are based on percent-of-sales method of planning
2. 2% inflation rate has been applied

Net Cash flows:-


Year 0 Initial Investment = (150,000)

Year 1 Inflows – Outflows = (129,000)

Year 2 Inflows – Outflows = 8700

Year 3 Inflows – Outflows = 61,675

Year 4 Inflows – Outflows = 119,765

Year 5 Inflows – Outflows = 183,642


STAR ENTERPRISES
Business Idea 2
Initial Investment
An estimation of Initial investment required containing detail of one-off costs plus some
working capital requirement e.g.
ONE-OFF COSTS
Sr. ITEM Rate Qty Total
1. Advance AND Rent of office Rs. 30,000
2. BOTTLE 20 1000 Rs. 20,000
4. MATERIAL+PACKING 25 1000 Rs. 25,000
TOTAL Rs. 75,000

WORKING CAPITAL
xx months’ operating expenses = Rs. 30,000 (w-2)

INITIAL INVESTEMENT REQUIRED = Rs. 30,000 + Rs. 75,000 = RS.


105,000
Source of Revenue Generation:-
BY MANUFACTURING HANDWASH

Potential Expenses:-
 FREIGHT
 WAGES
 ENTERTAINMENT
 ADDITIONAL WAGES
Schedule of Operating Inflows:- (W-1)
Year 1
(S.P * units sold per day * No. of days worked)
Month 1 100 × 13 × 25 = Rs. 32,500
Month 2 100 × 13 × 25 = Rs. 32,500
Month 3 100 × 13 × 25 = Rs. 32,500
Month 4 100 × 13 × 25 = Rs. 32,500
Month 5 100 × 13 × 25 = Rs. 32,500
Month 6 100 × 13 × 25 = Rs. 32,500
Month 7 100 × 13 × 25 = Rs. 32,500
Month 8 100 × 13 × 25 = Rs. 32,500
Month 9 100 × 13 × 25 = Rs. 32,500
Month 10 100 × 13 × 25 = Rs. 32,500
Month 11 100 × 13× 25 = Rs. 32,500
Month 12 100 × 13 × 25 = Rs. 32,500
Total = 390,000
Year 2
(S.P * units sold per day * No. of days worked)
Month 1 105 × 15 × 25 = Rs. 39,375
Month 2 105 × 15 × 25 = Rs. 39,375
Month 3 105 × 15 × 25 = Rs. 39,375
Month 4 105 × 15 × 25 = Rs. 39,375
Month 5 105 × 15 × 25 = Rs. 39,375
Month 6 105 × 15 × 25 = Rs. 39,375
Month 7 105 × 15 × 25 = Rs. 39,375
Month 8 105 × 15 × 25 = Rs. 39,375
Month 9 105 × 15 × 25 = Rs. 39,375
Month 10 105 × 15 × 25 = Rs.39,375
Month 11 105 × 15 × 25 = Rs. 39,375
Month 12 105 × 15 × 25 = Rs. 39,375
Total = 472,500
Year 3
(10% growth over the year)
Total = 519,750
Year 4
(10% growth over the year)
Total = 571,725
Year 5
(10% growth over the year)
Total =628,898
Note: - Following estimations are based on;
3. survey including 5 interviews details of which are attached in annexure
4. Industrial growth in the sector
Schedule of Operating outflows:- (W-2)

Year 1
(Cost per unit * No. of units sold)
Direct Costs = 45 × 1000 (w-1) = Rs.50,000
Other Expenses:-
4. Rent 5,000 × 12 = 60,000
5. Bills 5,000 × 12 = 60,000
6. Salaries 16,000 × 12 = 192,000
Total Rs. 312,000

Grand Total = 50,000 + 312,000 = Rs. 362,000


Year 2

Grand Total = 50,250 (N-1) + 312,840 (N-2) = 363,090


Year 3

Grand Total = 51,675 (N-1) + 313,757 (N-2) =365,432


Year 4

Grand Total = 51,142 (N-1) + 313,760 (N-2) = 364,902


Year 5

Grand Total = 52,757 (N-1) + 313,827 (N-2) = 366,584


Notes:-
3. Estimations are based on percent-of-sales method of planning
4. 2% inflation rate has been applied

Net Cash flows:-


Year 0 Initial Investment = (105,000)

Year 1 Inflows – Outflows = 28,000

Year 2 Inflows – Outflows = 109,410

Year 3 Inflows – Outflows = 154,318


Year 4 Inflows – Outflows = 206,823

Year 5 Inflows – Outflows = 262,314

Capital Budgeting Techniques Results:-

TECHNIQUE NAME BUSINESS 1 BUSINESS 1

Payback Period 4years 5months 1year 8months 13days


24days

Discounted Payback Period 4years 10months 1year 8months 23days


7days

NPV 19,948 28,670

IRR Xx xx

Note:-

Detailed Calculations are attached in annexure

Conclusion:-

Not less than 800 words briefly explaining the tools used and which of the
TWO business idea you find better for starting a new business
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