Business Plan of Agricultural Mechanization ServiceProjectLocation: West Shoa Zone,Ejersa

Lefo Woreda ChelelekaBobe Kebele.Name of Farmers Mr. AyaloMobile Number (

0941986151) Dec. 2020

Table of Contents

1.INTRODUCTION..........................................................................................................................................3

1.1.BACKGROUND...........................................................................................................................................
.........4

1.1OBJECTIVE OF THE
PROJECT..................................................................................................................................5

2.PROJECT DESCRIPTION AND

LOCATION......................................................................................................5

2.1.LOCATION.................................................................................................................................................
........5

2.2.DESCRIPTION.............................................................................................................................................
........5

2.3.MISSION
STATEMENT..........................................................................................................................................6

2.4.COMPANY GOALS AND

OBJECTIVES........................................................................................................................7

2.5.AMOUNT AND PURPOSE OF THE LEASE

FINANCING....................................................................................................7

2.5.1. Purpose of the lease Financing

loan.......................................................................................................7

2.5.2. Amount of the

loan.................................................................................................................................8
3. MARKET ANALYSIS OF AGRICULTURAL
MACHINERY...................................................................................9

3.1.CURRENT DEMAND AND SUPPLY FOR TRACTOR HIRING

SERVICE.....................................................................................9

3.1.1.MARKET SIZE @TARGET

CUSTOMERS .....................................................................................................................9

3.2. .MARKETING PROMOTION AND

STRATEGY..............................................................................................................9

3.2.1.Machineries and Equipment................................................................................................................9

3.2.2.Machine Capacity and Service Provision

Program ....................................................................................10

3.2.3. Raw materials and inputs, Fuel and lubricaon cost......................................................................10

3.2.4. Price of rental Tractor based land llage per hector.......................................................................12

3.2.5. Sales and Revenue Plan e.................................................................................................................12

3.2.6. Machineries and Equipment -----------------------------------------------------------------------13

4. FINANCIAL
REQUIRMENT.........................................................................................................................13

2.19.BUDGET
BREAKDOWNS......................................................................................................................................132.2.
EXPENSES........................................................................................................................................................
132.2.1.RAW
MATERIALS..............................................................................................................................................132.
2.2.WAGE AND SALARY
EXPENSE..............................................................................................................................142.2.3.OTHER
INITIAL
COSTS........................................................................................................................................142.2.4.SUM
MARY OF FINANCIAL REQUIREMENT AND SOURCE OF
FUND..........................................................................15-162.2.5.FINANCIAL
STATEMENT...............................................................................................................................172
SummaryAlthough agricultural productivity in our region Oromia is improving, still major gaps

in productivity in different when compared with the global output level. (FAO, 2014).This low

productivity is because of the agricultural system of Ethiopia is predominantlysubsistence,

characterized by the use of traditional farming implements and practices like usehand-tools for

land tillage, crop harvesting, threshing from thousands of year ago whichoperated by hand

animal power.Mechanization plays a key role in enabling the growth of commercial agri-

foodsystems and increasing the efficiency of post-harvest handling, processing andmarketing

operations. Consequently, it determines food availability and accessibility, aswell as food prices

paid by urban and rural poor, thus contributing to increasedhousehold food security.Thus,

mechanization shall contribute in enabling the small holder farmers to timely prepareland,

sowing and harvest their crops as early as possible to cope up with the erratic rainfallcondition

and to save time and labor.This Ayalew __________ agricultural Mechanization project

feasibility study Business plan pictures the viability of mechanized agricultural production

implemented by owner and rentalCombiner harvester service. The rental machineries services

proposed to provide hiremachine for smallholder farmers. 3

1.Introduction1.1.Company OwnershipCompany Name –Mr. Ayalewu _____________

Mechanized AgriculturalProduction and Rental Combiner harvester Service.Owner Name :-

Ayalewu ____________  Nationality :- Ethiopian1.2.AddressRegion :- OromiaZone :-

W/ShoaWoreda :Ejersa LefoKebele/Village:- Cheleleka Bobe Phone Number:-

09419861511.3.BackgroundAgriculture which our region as well as our country predominantly

depend it, is the largest sector and the back bone of economy. The Oromia region has also great

potential to Agriculture because of its vast area of fertile land, diverse climate, generally
adequate rain fall and largelabor pool. Despite Oromia has great potential to agriculture, our

agriculture remainedundeveloped. This is due to quite a lot of factors. The largest shares were

low level of mechanization inputs and low level of technologies. Moreover, the greatest source

of farm power was mainly human and animal since dated back 2000 BC (FAO, 2007).

Introducing agriculturalmechanization in the region is crucial to transform the existing

agriculture which had been driven by traditional farming systems that characterized by low

productivity.Ayalewu______________:-is an individual entrepreneur engaged onmechanized

agriculturalfarming system and giving rental services by rentingCombiner harvester in his

project area.He is working on agriculture farming production mainly by focusing on Wheat crop.

In additionhe provide Combiner harvester services for surround farmers and farmers found in

his neigh boring kebele and woredas to produce additional income by renting Combiner

harvester withcompetitive price to meet the demand of small holder farmers.4

Role of Agricultural mechanization:-Majority of the Ethiopian population is exiting in the

Oromia region. In existing situation, theregion is characterized by high growth rate of

population, low productivity of food crops due tolow modernization of agriculture. Hence,

mechanization is must to produce more and feedupcoming population.In this case “Ayalewu

________ Agricultural mechanized project” plays a vital role inimproving the farming system

by:- Increase labor productivity:Traditional farming consumes high human and animal power. In

case of mechanization smalllabors can do much job and decreases cost of production. This
means increase in labor productivity by releasing of labor for other sectors of the economy.

Increase land productivity:Mechanization is a complementary input. This is to mean producing

more from the existing land.Mechanization technology increases productivity by enabling

farming community to produce agood quality of work, increase production of crops output by

improving soil water infiltrationand air movement in the soil, timeliness of operation, good

cropping intensity and faster turnaround, reduction of crop losses, & increase in the cultivated

area.Reduces hard work of the rural traditional framing :-Farming community had been working

in hard, and harsh, condition. They produce crop that produced by such a condition to fed

themselves and supply to urban population. Mechanizationmodernizes existing farming, makes

the life of rural community pleasant and attractive.1.4.Objective of the ProjectThe main

objective of this project is:- To increase his and others farmer agricultural productivity by

provide agriculturalMechanization services (Combiner harvester).5

2.2.Increase incomes by providing Combiner harvester on rental basis.Increase incomes by

providing Combiner harvester on rental basis.3.3.Project Description and LocationProject

Description and Location3.1.LocationEjersa lafo District is located in,west

shewazone,Oromiaregional state. Ejersa Lafoworeda is oneof the twenty two woredas of

thewest shewazone. The woreda‟s capital,Olonkomiis located sixtysix kilometers west of Addis

Ababa on the Addis Ababa–Naqamiteroad. It is situated between twotowns:OlankomiandGeba

Dilbeta. The woreda has a total area of 28613.6hectars with altitudinalrange from 2000–3288
m.a.s.l and also the population of the woreda is 95,021 (Ejersa Lefo woredaReport, 2016).

Hence, the location of the woreda contributes for the rising of the price of crops for the farmers

who are living in the district. So, this location of woreda is motivating the productivity of

farmers in the area and they have obtained urban processed goods and their agricultural

productionsold to urban dwellers. As a result, the relationships between rural and urban areas

are intertwined.As well as, this elevation of the study area is mostly suitable for the production

of teff, wheat, barley,chickpea and grass pea. It implies that, these different sources of crops

are the major sources of income for the households in the woreda.The woreda is bordered in

the south by Elluand Dawo woreda of southwest shewazone which has alength of 35kms

separated by Dalachoriver, in east by Ejereworeda which has a length of 15 kmsseparated by

Huluko, in the west by Dendiworeda with 15kms, in the north by 35 kms Jelduworeda. The

woreda has good agro- ecological zones that made unique, among twenty two woreda of west

shewazone. Among the agro- ecological zones, dega comprises 29 percent and woina-dega 71

percent. It indicates that this favorable climatic condition and land features of the woreda

arecomfortable for the diversity of agricultural production and so this woreda is a notable area

by itssurplus agricultural production among twenty two woredas. Therefore, these better

conditions can bea reason why the living condition of households are enhanced in the

woreda .The woreda has 17 rural and 3 urban kebeles .The Woreda has 11 Private clinics, 13

health posts,2 Health center and 3 private rural drug venders in the Woreda. There are 16 first

cycle primaryschools (1-4), 11 second cycle primary schools (5-8) , 1 high school (9-10) and 3

private schooland 3 kindergarten in the Woreda.6

3.2 Topography Ejersa Lafoworeda is characterized by nearly flat topography. Among land

features: 45% plateaus, 43% rugged and 12% mountain are located within this woreda. The

altitude above2000m is accounts for 40 percents of the total woreda. It assumed that the

present land form or relief structure of the Ejersa Lafoworeda is mountains, hills, plains and

other natural phenomenaare the result of geological and climatic events. On the other hand

among the presented landforms, the district has a plain land which is more suitable for mixed

farming activities than highlands. It indicates that, these favorable land forms and climatic

condition are the most importantfactors that affect the living condition of households in the

project area positively.3.3 Soil According to an assessment made on the basic of village records:

28 percent is red soil and 60 percent is black soil. The remaining is covered by yellow soil

accounts for 6 percent and brownsoil for 6 percents. It means that the combination of black

clay soil and alluvial soil has adequatenutrients which are the most important factors in

agricultural production for better crop production. Due to its clay characteristics of soil; it is

sticky and crack during summer and winter respectively. So, it is difficult to use for farming

purposes. But the portion of the alluvial soil isvery important for agricultural production in the

District. Due to the fertility of this soil, thelargest numbers ofhouseholds are residing on it. As a

result, fragmentation of the farm land isoccurred.3.4DescriptionTractor is a self-propelled

power unit that used for pulling or pushing agricultural machiner or trailers, for plowing, tilling,

harrowing, planting and similar tasks. This save manpower andmaterial resources and greatly

reduced the burden on farmers. The main service are produceagricultural production by using

mechanized agricultural and provided land tiller tractor throughrental bases for small holder

farmers.The tractor operates with respective accessories known as disk plough and the disk
harrow .Thedisk plough performs the soil tillage/ Digging of deep into the top soil while the disk

harrow willcut and digest the soil practices in to smaller units and make ready for sowing.

MissionStatementMission7

The project aims to provide advanced farm land preparation services in order to increase

theamount of production surrounding area.44Company Goals and ObjectivesCompany Goals

and ObjectivesThe ultimate goal is provide quality farm land preparation and land tiller tractor

rental service indistrict kebeles and surrounding woredas. The project also contribute to the

transfer of knowledge on the importance of mechanization.4.2Purpose and Amount of the loan

Finance4.1.2. Purpose of the loan FinanceThe project loanhas been requested for purchasing of

a tractor and its accessories known as plough and harrow disk.4.1.3. Amount of the loanThe

total cost of the machinery is estimated1,991,816.51 EB Mr. Tolesa Ayano project willexpect to

raise equity of birr,597,545 that coverd 30%, from its own capital and to borrow1,394,272

(70%) from Commercial Bank of Ethiopia (CBE) for five years lone for the purchaseof

Machinery.4.1.4. Revenue of the project4.1.4. Revenue of the project4.1.5.. Revenue from Crop

production Mr. Tolesa Ayano has total of 5.5 hectares. From those hectar 5 of the hectares

used for production purpose and in addition to this he cultivates additional 4 to 5 hectares of

farm land peryear by conractual agreement with neigh bouring and sourounding farmers in

order to get finacialin come by cultivating different types of crop.Year of

productioncroptypeownlandcontractagreementtotalcultivatedlandaverage
productivity/hectaretotal productionaverage price per100kgYear one2020/21Maize3.558.590

765800 612,000Teff1.501.525 37.52800 105,0008

Total5510 717,000Year two2021/2022Maize3.558.590 765800 612,000Teff1.501.525 37.52800

105,000Total5510 717,000Year three2022/23Maize3.558.590 765850 650,250Teff1.501.525

37.52800 105,000Total5510 755,250Year four2023/24Maize3.558.590 765900

688,500Teff1.501.525 37.52800 105,000Total5510 793,500Year five2024/25Maize3.558.590

7651000 765,000Teff1.501.525 37.52800 105,000total5510 870,000Total average estimaeted

production cost of five years/ 2020-2024S.NDescriptionInput perhectaresYear one2020/21Year

two2021/2022Year three2022/23Year four2023/24Year five2024/25Seed(kuntal)Maize2.125

16,490 16,690 16,890 17,090 17,290Shumbura0.975 4,973 5,173 5,373 5,573 5,773Fertilizer

(kuntal)Maize34 51,557.43 51,757.43 51,957.43 52,157.43 52,357.43Shumbura1.5 2,274.59

2,474.59 2,674.59 2,874.59Chemicals andherbisides 9,000 9,000 9,000 9,000Land

preparetioncost 20,562 24,618.20 28,674.40 32,730.60 36,786.80Harvesting andtreshing cost

27,600 33,410 39,220 45,030 50,840Total 110,994 121,260 131,526 141,793 152,059Total

Incame and Expenses of Five year Agricultural ProductionS. NDescriptionYear one2020/21Year

two2021/2022Year three2022/23Year four2023/24Year five 2024/25IncomeSeles of crop

Product 717,000 717,000 755,250 793,500 870,000Expenses 110,994 121,260 131,526 141,793

152,059Profit 606,006 595,740 623,724 651,707 717,9419

55Market Analysis of Agricultural Machinery.Market Analysis of Agricultural Machinery.In the

Nono woreda there is no enough a farm mechanization business-giving tractor hires forthe

farmers in the area. But interested farmers get tractor service from neighboring woredas

andzones. Dou to that the land tiller tractor renting tractor is a profitable way of income

generation beside the income from agricultural production.5.2Current demand and supply for

Tractor hiring service Now a days, traditional oxen based cultivation method is giving away to

mechanizedfarming in some part of rural areas of Oromia where rental tractor service is

located. In our case, farmers in the area cultivate and produce their agricultural production

based ontraditional farming system.Based on this, project owner and number of the

smallholder farmers that needs tractor servicefor quality land preparation.5.2.1Market size &

Target CustomersThe market size of this rental tractor mechanization is related with the small

holders farmersin Nono Woreda who uses rental tractor services and the adjacent

woredas.5.2.2Marketing Promotion and StrategyTo reach customers different marketing ways

will be used. Among the different marketingstrategies and tools for promotion using the

different formal and informal social association andParticipating on farmers field days in order

to introduce tractor rental service are important.5.2.3Machineries and EquipmentThe

importance of the tractor machinery is that it saves labor and time, it cultivates the soil better

than the traditional “Maresha”, the machine can operate for more than 16 hours as compared

tooxen which cannot go beyond 6 hours. Thus, by implementation of this project a

significantincrease of yield by more than 4 folds could be realized by customers. This will

increasecustomer satisfaction and have advantage in efficient use of resources and improved

food self – sufficiency goals of farmers.10

Source of MachineryThe sources of machinery are where from legal farm machinery

importer.Installation costIt is very easy to install and It will not take much time and labor. It just

need connecting of thetractor to the above discus and adjusts the machine, and then it can

start functioning. Thus, nocost is required as the driver can perform.5.2.4Machine Capacity and

Service Provision ProgramAt its full capacity operation, the machine operates 16 working hours

per day, in 2 shifts, 6working days per week, 26 working days per month and 300 working days

per year. Themachine shall operate at a capacity of 50%, 66.67%,83.34 %,90% and 100% during

the first,second and third years, respectively. This will be resulted from sufficient promotion

works.Table: 1. Tractors capacity and service provision program

.S.NModelcapacity/Estimatedland ploughed per dayAvailableday of working per year

TotalEstimatedland ploughed by 1 tractor per year Totaltractor Capacity

operationTotalEstimated land ploughed bytotal tractor per year Year 1Year 2Year 3Year 4Year

5390HP41285121512512563.2619.52681.472749.62Ida'ama1512051.2619.52681.472749.625.

2.5Raw materials and inputs, Fuel and lubrication costThe raw materials for tractor machine

and mounted equipment are fuel and lubricants, grease,change of fuel filter, change of

different used oils and replacing by new.Fuel and lubricants are daily consumed as the tractor

does a job or travelled. A tractor utilizes20liters of fuel oil to plough 1 hectors. Assuming20 birr

per litter, the fuel cost will be 400 birr per hector. Oil & lubrication is assumed to be 10% of the

fuel cost which is40 birr per hector. Thus,the total fuel and lubrication cost per hector will be

440 birr.11
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Change of fuel filter, greasing and overall service is assumed at25,600 birr per annum per

tractor. Thus, the annual cost of fuel, lubrication, service and other related costs are

summarizedin the table blow.

Table:2. Costs of Tractors Raw materials and inputsS.NDescriptionYear 1Year 2Year 3Year 4Year

5Fuel cost per annum (20lit. per Hek)256,000281,600309,760340,736374,810Oil and

lubricants(10% of the fuel cost)25,60028,16030,97634,07437,481Change of fuel filter,greasing

and overallservice30,00033,00036,300 39,930

43,923Total311,600342,760377,036414,740456,214Cost of direct labor is considered under this

title of raw materials and inputs. Cost of directlaborers include the wages and salary .The

details of direct labor required for the project andrespective wages/salaries has been indicated

in the table below.Table:3. Cost of direct and indirect labor (wages/salaries).S.NPosition of

employeesUnits of measurementQuantityUnitcost per monthTotalcost per monthTotal Cost per

annumDirectlabor INDIRECTLABOR 1General Manager No15,0005,00060,00060,0002Tractor

Drivers No13,0003,00036,00048,00048,0003Assistant drivers

No12,0002,00024,00024,00016,0004Cashier accountant No000005Marketing officer

No000006Machine rental andCustomer servicedepartment No000007Cost of

workcommissioning (10%of base salary)01000

12,0000TOTAL310,00010,000120,00072,000124,0005.2.6Price of rental Tractor based land

tillage per hector12

The price of tractor tiller depends whether the tillage is first round, second or third round.In

addition to this the price also varies from soil to soil. To set price of the rentalmechanized

tractor tillage, the current prices of tractor tillage in the project area wereconsidered. The

following current prices per hector for first, second and third tillage wereconsidered.

Accordingly, the price for Tractor based land tillage is set 2000 birr perhector.66Revenue from

rental tractor Revenue from rental tractor 6.2.1Sales and Revenue planTable 4. Sales Revenue

of TractorsDescription of RevenueProductionYearQty (hek ploughedaverage)Qty (No of

tractors)UnitPriceTotal PricePloughing,1st,2nd and 3rdin average Price151212000

1,024,000"256312,200 1,239,040"362012,420 1,499,23846811 2,662 1,814,0787501 2,928

2,194,887The financial resource is a prime resource for undertaking any activities. The financial

analysisof the lease financing machinery is based on the data provided. Hence, the total budget

for implementing this project is estimated at2,714,024Out of the total budget of the project

30% or 597,545(only cost of tractor) and ather cost722,207 will be covered by project
promoter, whilethe rest 70% or EB1,394,272 will be covered by financial institutions of CBE. The

long-termcredit is assumed to be obtained from the Bank with the current interest rate

of11.5%.6.3Budget Break downsThere fore the said amount of finance is needed for

undertaking the following.A.MACHINARY AND EQUIPMENTThe total cost of machineries and

equipment’s are estimated at EB1,991,816.51.1333FINANCIAL REQUIRMENTFINANCIAL

REQUIRMENT

Type Of Machinary QuantityEstimated Unitprice (birr) Total EstimatedUnit price (birr30%

Cost1 John Deer size5090E(90HP)11,544,729.941,544,729.94463,418.982Disc plough

1201,535.62201,535.6260,460.6863Disc

Harrow1245,550.95245,550.9573,665.285Total1991816.511991816.51597544.956.4ExpensesI

n estimating costs of operations, expenses have been categorized into direct costs of

operationsand indirect expenses. Direct operating expenses include cost of raw materials such

as fuel oiland lubricants, and direct labor.6.5Raw materialsTable: 5. Raw & auxiliary materials

requirementS.NDescriptionYear 1Year 2Year 3Year 4Year 5Fuel cost per annum (20lit. per

Hek)256,000281,600309,760340,736374,810Oil and lubricants(10% of the fuel

cost)25,60028,16030,97634,07437,481Change of fuel filter,greasing and

overallservice30,00033,00036,300 39,930

43,923Total311,600342,760377,036414,740456,214Wage and Salary ExpenseTable: 6. Human

power Requirement, Monthly and Annual SalaryS.NPosition of employeesUnitsof

measurementQuantityUnitcost per monthTotal cost per monthTotal Cost per annumDirectlabor

INDIRECT LABOR 1General Manager No15,0005,00060,00060,0002Tractor Drivers

No13,0003,00036,00048,00048,0003Assistant drivers

No12,0002,00024,00024,00016,0004Cashier accountant No000005Marketing officer

No000006Machine rental andCustomer servicedepartment No000007Cost of

workcommissioning (10%0100012,000014

S.NPosition of employeesUnitsof measurementQuantityUnitcost per monthTotal cost per

monthTotal Cost per annumDirectlabor INDIRECT LABOR of base

salary)TOTAL310,00010,000120,00072,000124,000Table 7. Other Initial Costs1Property

Insurance (1% of fixedInvestment Cost)19,9181% of fixed Investment

Cost2Uniforms2,0002*1000 br 3Telephone, fax and postal800100 per month per

tractors4Repair and maintenance6002 % of the Fixed Cost5Advertisement1,0001000 per

tractors6Stationery and other office supplies0200 per month per tractors7Electricity00 per

tractors8Water1,0001000 per tractors11Transportation cost4,0004000 per tractor 12 Gas Oil

and lubricant2,56010% of fuel cost13For training10,0005000 per person14Miscellaneous

Expense2,0002000 birr per month per tractorsTotal43,8786.6Summary of Financial

Requirement and Source of fundTable:- 8. Financial RequirementSNDescriptionCost in birr1Fixe

Investment1.1Machinery & equipment1,991,8171.2other (building, office equipment,

etc)0Total Fixed Investment Cost1,991,8172Operatin Expense2.1Raw

Materials311,6002.2Salary Expense120,0002.3Other Operating Expense43,878Total Operating

Expense475,478Sub total2,467,295Contingency (10% of sub total)246,729Total Cost (sub total +

Contingency)2,714,024Table :9. Source of fund15

S.NDescription% shareAmount in birr 1Promoters' contributionfor tractor

cost30%597,5452Bank finance for tractor cost70%1,394,2723Other promoter contribution-

722,2074other borrowingTotal100%2,714,024Table: 10. Loan Repayment

ScheduleYearPrincipal PaymentIntrest rate(11.5 %)Total

AnnualPaymentRemainingBalance00001,394,2721278,854160,341439,1961,115,4172278,8541

28,273407,127836,5633278,85496,205375,059557,7094278,85464,136342,991278,8545278,85

432,068310,9230Table: 11. Depreciation ScheduleSNDescriptionOriginalValue InBirr

Depreciationrate in %DepreciationPer year 1DepreciationPer year 2DepreciationPer year

3DepreciationPer year 4DepreciationPer year 51

Machines&Equipments1,991,81710%199,182199,182199,182199,182199,182Sales

RevenueBased on the production capacity of the envisioned machinery indicated in previous

the totalrevenue of the project is projected as indicated in the table below.Table:-12. Sales

RevenueType Of In comeTotal Price Year 1 Year 2 Year 3 Year 4 Year 5Sales from

Tractorssurvices 1,024,000 1,239,040 1,499,238 1,814,078 2,194,887Sales from crop production

survices 606,006 595,740 623,724 651,707 717,941Total 1,630,006 1,834,780 2,122,962

2,465,786 2,912,82916
77FINANCIAL STATEMENTFINANCIAL STATEMENTTable: 13. Balance Sheet Asset Current

AssetCash597,545Inventory of Raw Material -Total Current Asset 597,545Fixe AssetMachinary

1,991,817other (building, office equipment, etc) -Total Fixed Asset 1,991,817Total Asset

2,589,361LiabilityAccount Payable 1,394,272Owners EquityCapital 597,545Total Liability &

Owners' Equity 1,991,817A.Income Loss StatementThe project revenue and production costs

are listed and compared to evaluate whether the projectgenerate profit or loss. Accordingly,

the forecasted income statement has shown that the projectis profitable throughout its

life.Table :-14. Income –loss statement of the projectDescription Year 1 Year 2 Year 3 Year 4

Year 5 Sales1,630,0061,834,7802,122,9622,465,7862,912,82917

Cost of materials422,594464,020508,562556,532608,273Cost of direct labor

72,00082,80095,220109,503125,928Sub total of direct materials and direct labor

cost494,594546,820603,782666,035734,201 Gross

profit1,135,4121,287,9601,519,1801,799,7512,178,627 Expenses

Salary124,000142,600163,990188,589216,877 other operating

expenses43,87850,46058,02966,73376,743 Annual

depreciation199,182199,182199,182199,182199,182 Principal

repayment278,854278,854278,854278,854278,854 Interest

payment160,341128,27396,20564,13632,068 Total indirect

expenses806,255799,369796,260797,494803,724 Profit before

tax329,157488,591722,9201,002,2561,374,903
Tax(30%)98,747146,577216,876300,677412,471 Net

Income/loss230,410342,014506,044701,580962,432B.Cash Flow AnalysisThe cash flow analysis

provides a look at the movement of cash in and out of the project. It isimportant to determine

whether or not the project has enough cash to pay its bills, handleexpenses and acquire

asset.Table :- 15. Projected Cash Flow StatementDescriptionYear 0 Year 1 Year 2 Year 3 Year 4

Year 5Owners equity597,544.95Loan principal1,394,271.56

Sales1,630,0061,834,7802,122,9622,465,7862,912,829Total Cash In

flow1,991,816.511,630,0061,834,7802,122,9622,465,7862,912,829Cash PaymentRaw

Materials422,594464,020508,562556,532608,273Salary

Expense196,000225,400259,210298,092342,805Other Operating

Expense43,87850,46058,02966,73376,743Loan

Repayment278,854278,854278,854278,854278,854 Intrest

payment160,341128,27396,20564,13632,068

Tax(30%)98,747146,577216,876300,677412,471TOTAL

PAYMENT1,991,8171,200,4151,293,5851,417,7361,565,0251,751,215 NET CASH

FLOWS429,591541,195.15705,225.64900,761.171,161,613.82CUMMULATIVE

CASHFLOWS429,591541,195.15705,225.64900,761.171,161,613.8218