Assignment –Case/Problem:-II-20 Marks- Group A

Mr Sundaram is an entrepreneur with Graduation in Catering from Erode Dist., has an ambition to
start Pvt Ltd Hotel firm . During the initial planning , he decided to bringforth a capital of Rs.20 lakh,
but the business investment requires Rs.50 lakh. Due to the further need of financial requirement ,
he approached one of the well known bankers viz IKIKI Bank . During the first level of interaction ,
Bank manager ,IKIKI Ltd consented to lend Rs.30 lakh with reference to his reputation in various
business ventures. He planned for total fixed asset investment worth Rs.25 Lakh. But at the same
time , he demands Mr Sundaram to disseminate the Projected cashflows statement for 5 year with
the following expected growth in performance

Growth
Growth Details
( from Previous year) 1 2 3 4 5
Revenue 0% 20% 20% 30% 30%
Expenses 0% 10% 15% 15% 15%
Mr Sundaram is expected to repay the bank loan in 10 years .The banker demands Mr Sundaram to

m
settle the bank loan in annual instalments

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Mr Sundaram desirously expected to earn a return of 20% on owners’ contribution. The Banker

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agrees to charge rate of interest on loan 10%. The business house of Mr Sundaram has convention of
charging depreciation @10% in accordance with SLM.

o.
rs e
The hotel is expected to operate in a month 23 Days
ou urc
Particulars Rs Quantity Particulars Number
of period
o

Expected Revenue 25,000 12

Rice per Kg 45 35 Kg/day 12
aC s
v i y re

Vegetables 2000 Daily 12

Chicken/Kg 180 20 Kg/day 12
Mutton/Kg 460 10 Kg/day 12
Grocery Provision 5000 Daily 12
ed d
ar stu

Electricity 30000 two months 6

once
Average Salary 8000 10 staf 12
sh is

members
Utensil/Overall maintenance 20000 Monthly 12
Th

Rent 20,000 Monthly 12

Other expenses 15,000 Monthly 12

Interest In accordance with loan Annual

agreement
Depreciation 10% -Straight line Per
method annum
Business income taxation 25% Per
annum
Insurance 1% should be paid on beginning balance of every year .
Banker requires the proposal should contain NPV and IRR

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