Ban Chang Water Management Project

We are analyzing how attractive is the opportunity to invest in a 800 m3/hour water sourcing and treatment faci
under a 25 year license and suppy contract. We want to forecast the cash inflows and outflows we expect from
the required investment costs, how long it will take to get our money back (the "pay back period"), and how muc
After we make these financial forecasts, we then want to calculate the Net Present Value (NPV) of the project as

To do this analysis, we have researched the project and discussed with our consultants to come up with the follo

A. Investment Required
1 Developing the land site of 100 rai and constructing the reservoir to keep water will be Bt25 million
2 Developing the river bank for better water flow estimated to cost about Bt2 million
3 Water treatment plant as shown in the technical study will cost Bt 21 million for 200 m3/hour capacity, bro
general plant facility Bt 13.5 million, pumps & filters Bt 5.5 million, and membranes Bt 2 milli
Note that general plant facility cost is a fixed one-time cost, while the other two costs are for
Note the membranes need to be replaced every 5 years
4 Landscaping the property with a perimeter fence for about Bt 3 million
5 Should consider budgeting a contingency for any further expenses or higher costs of an additional 3% on th
6 Leasing the 100 rai land plot for 25 years will cost Bt 1 million per rai, with 10% paid upfront and the remai
7 Upfront pre-operating expenses to be incurred during the construction period will be
Hiring design consultants for a cost of 2% of the construction cost
Hiring a team to management the project for a cost of 4% of the construction cost
Administration expenses of Bt 100,000/month for 2 months
Fees & charges to government authorities of Bt 350,000
Tax, corporate, legal & accounting fees of Bt 500,000

B. Sales Revenues (simple assumption is that this = cash inflows)

1 Our 800 m3/hour facility can operate fully at 18 hours/day and 365 days/year, but we expect to operate an
2 We will sell our water to the PWA at Bt 12 per m3 initially, with pricing to increase Bt0.50 every 5 years

C. Variable Expenses
1 Electricity costs to run the water treatment plant will be Bt 0.67 per m3 water produced
2 Chemicals to treat & clean the water will cost Bt 1.66 per m3 water produced

D. Fixed Expenses
1 Note the land lease payments to be paid annual from A.5 above
2 Salaries for workers will be Bt 456,000 per month, with an average 1 month bonus. This figure will increase
3 Other benefits for workers (social security, provident fund, health) estimated at 8% of salary expenses
4 Office rental of Bt 70,000 per month, increasing by 1% inflation each year
5 Various office utility & admin expenses of Bt 30,000 per month, increasing by 1% inflation each year

E. Financing Assumptions
For now we will simply assume that the investment funds required will come from ourselves as founding sh
assuming a discount rate (hurdle rate) of 12% which reflects the risk of the project.and also
 water sourcing and treatment facility in Rayong which we would sell to the local Provincial Water Authority (PWA)
ows and outflows we expect from the project to understand how much money we need to start and fund
e "pay back period"), and how much money we will make the project every year going forward.
esent Value (NPV) of the project as well as its the Internal Rate of Return (IRR).

nsultants to come up with the following assumptions:

p water will be Bt25 million

Bt2 million
llion for 200 m3/hour capacity, broken out as
5 million, and membranes Bt 2 million (replaced every 5 years)
t, while the other two costs are for 200 m3/hour capacity (ours will be a 800 m3/hour facility).

gher costs of an additional 3% on the above investment items of A1-A4

th 10% paid upfront and the remainder paid in equal annual instalments
period will be

of the construction cost

s/year, but we expect to operate and sell at 85% of this capacity to allow for some downtime and repairs.
o increase Bt0.50 every 5 years

water produced

onth bonus. This figure will increase by 2% inflation each year

mated at 8% of salary expenses

ng by 1% inflation each year

come from ourselves as founding shareholders with no debt financing.

he project.and also
er Authority (PWA)
CASHFLOWS

Assumptions

Investment Required
Resevior
River Bank

general plant facility

capacity in m3/hour
pumps & filters 5,500,000
membrane for new capacity 2,000,000
membrane for replacement same as above
fence
Total construction

contingency expenses (%) 3%

Lease 100
1,000,000
design consultants 2%
management team 4%
Administration expenses 100,000
Fees to government authorities
Tax, corporate, legal & accounting fees
Total investments

Sales Revenues
Facility at full operation 18
Expected operation capacity
Total amount of water per year
PWA Price 12.00
Total cash inflow

Variable Expenses
Electricity 0.67
Chemicals 1.66
Total Variable expenses

Fixed Expenses
Salaries 456,000
Workers' Benefits 8%
Office rental 70,000
utility & admin expenses 30,000
Annual lease expenses 25
Total fixed expenses
Taxes

Net cashflow for the year

Accumulated

Payback Period
Internal Rate of Return (IRR)
Net Present Value (NPV) 12.0%
Notes Year 0
8/5/67

(25,000,000)
(2,000,000)

(13,500,000)
800
baht for 200 m3/hour capacity (22,000,000)
baht for 200 m3/hour capacity (8,000,000)
Replaced every 5 years
(3,000,000)
For expenses in row 8,10-12 (46,500,000)

For expenses in row 5-8,10-13 (2,205,000)

rai (10,000,000)
baht per rai, paid upfront 10%
of upfront total construction cost (930,000)
of upfront total construction cost (1,860,000)
per month, for months = 2 (200,000)
(350,000)
(500,000)
(89,545,000)

Hours/day, year-round

Baht/m3 initially, increase every 5 years 0.50

per m3 water produced

per m3 water produced
0

per month, one month bonus, inflation 2%

Of salary expenses
per month, with inflation 1%
per month, with inflation 1%
years
0
 (89,545,000)
(89,545,000)

35.03%
160,945,133
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
8/5/68 8/5/69 8/5/70 7/5/71 7/5/72 7/5/73

800 800 800 800 800 800

0 0 0 0 0 0
0 0 0 0 0 0
(8,000,000) 0

0 0 0 0 (240,000) 0

0 0 0 0 (8,240,000) 0

85% 85% 85% 85% 85% 85%

4,467,600 4,467,600 4,467,600 4,467,600 4,467,600 4,467,600
12 12 12 12 12 12.5
53,611,200 53,611,200 53,611,200 53,611,200 53,611,200 55,845,000

(2,993,292) (2,993,292) (2,993,292) (2,993,292) (2,993,292) (2,993,292)

(7,416,216) (7,416,216) (7,416,216) (7,416,216) (7,416,216) (7,416,216)
(10,409,508) (10,409,508) (10,409,508) (10,409,508) (10,409,508) (10,409,508)

(5,928,000) (6,046,560) (6,167,491) (6,290,841) (6,416,658) (6,544,991)

(474,240) (483,725) (493,399) (503,267) (513,333) (523,599)
(840,000) (848,400) (856,884) (865,453) (874,107) (882,848)
(360,000) (363,600) (367,236) (370,908) (374,617) (378,364)
(3,600,000) (3,600,000) (3,600,000) (3,600,000) (3,600,000) (3,600,000)
(11,202,240) (11,342,285) (11,485,010) (11,630,470) (11,778,715) (11,929,802)
-

31,999,452 31,859,407 31,716,682 31,571,222 23,182,977 33,505,690

(57,545,548) (25,686,141) 6,030,541 37,601,763 60,784,740 94,290,430

- - Year 3 - - -
 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12
7/5/74 6/5/75 6/5/76 6/5/77 6/5/78 5/5/79

800 800 800 800 800 800

0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 (8,000,000) 0 0

0 0 0 (240,000) 0 0

0 0 0 (8,240,000) 0 0

85% 85% 85% 85% 85% 85%

4,467,600 4,467,600 4,467,600 4,467,600 4,467,600 4,467,600
12.5 12.5 12.5 12.5 13 13
55,845,000 55,845,000 55,845,000 55,845,000 58,078,800 58,078,800

(2,993,292) (2,993,292) (2,993,292) (2,993,292) (2,993,292) (2,993,292)

(7,416,216) (7,416,216) (7,416,216) (7,416,216) (7,416,216) (7,416,216)
(10,409,508) (10,409,508) (10,409,508) (10,409,508) (10,409,508) (10,409,508)

(6,675,891) (6,809,409) (6,945,597) (7,084,509) (7,226,199) (7,370,723)

(534,071) (544,753) (555,648) (566,761) (578,096) (589,658)
(891,677) (900,594) (909,600) (918,696) (927,883) (937,161)
(382,147) (385,969) (389,828) (393,727) (397,664) (401,641)
(3,600,000) (3,600,000) (3,600,000) (3,600,000) (3,600,000) (3,600,000)
(12,083,786) (12,240,724) (12,400,673) (12,563,692) (12,729,841) (12,899,183)
 33,351,706 33,194,768 33,034,819 24,631,800 34,939,451 34,770,109
127,642,135 160,836,904 193,871,723 218,503,523 253,442,974 288,213,083

- - - - - -
 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18
5/5/80 5/5/81 5/5/82 4/5/83 4/5/84 4/5/85

800 800 800 800 800 800

0 0 0 0 0 0
0 0 0 0 0 0
0 0 (8,000,000) 0 0 0

0 0 (240,000) 0 0 0

0 0 (8,240,000) 0 0 0

85% 85% 85% 85% 85% 85%

4,467,600 4,467,600 4,467,600 4,467,600 4,467,600 4,467,600
13 13 13 13.5 13.5 13.5
58,078,800 58,078,800 58,078,800 60,312,600 60,312,600 60,312,600

(2,993,292) (2,993,292) (2,993,292) (2,993,292) (2,993,292) (2,993,292)

(7,416,216) (7,416,216) (7,416,216) (7,416,216) (7,416,216) (7,416,216)
(10,409,508) (10,409,508) (10,409,508) (10,409,508) (10,409,508) (10,409,508)

(7,518,137) (7,668,500) (7,821,870) (7,978,308) (8,137,874) (8,300,631)

(601,451) (613,480) (625,750) (638,265) (651,030) (664,050)
(946,533) (955,998) (965,558) (975,214) (984,966) (994,816)
(405,657) (409,714) (413,811) (417,949) (422,128) (426,350)
(3,600,000) (3,600,000) (3,600,000) (3,600,000) (3,600,000) (3,600,000)
(13,071,778) (13,247,692) (13,426,989) (13,609,735) (13,795,998) (13,985,847)
 34,597,514 34,421,600 26,002,303 36,293,357 36,107,094 35,917,245
322,810,597 357,232,197 383,234,500 419,527,857 455,634,951 491,552,196

- - - - - -
Year 19 Year 20 Year 21 Year 22 Year 23
4/5/86 3/5/87 3/5/88 3/5/89 3/5/90

800 800 800 800 800

0 0 0 0 0
0 0 0 0 0
0 (8,000,000) 0 0 0

0 (240,000) 0 0 0

0 (8,240,000) 0 0 0

85% 85% 85% 85% 85%

4,467,600 4,467,600 4,467,600 4,467,600 4,467,600
13.5 13.5 14 14 14
60,312,600 60,312,600 62,546,400 62,546,400 62,546,400

(2,993,292) (2,993,292) (2,993,292) (2,993,292) (2,993,292)

(7,416,216) (7,416,216) (7,416,216) (7,416,216) (7,416,216)
(10,409,508) (10,409,508) (10,409,508) (10,409,508) (10,409,508)

(8,466,644) (8,635,977) (8,808,696) (8,984,870) (9,164,567)

(677,332) (690,878) (704,696) (718,790) (733,165)
(1,004,764) (1,014,812) (1,024,960) (1,035,209) (1,045,561)
(430,613) (434,919) (439,268) (443,661) (448,098)
(3,600,000) (3,600,000) (3,600,000) (3,600,000) (3,600,000)
(14,179,352) (14,376,586) (14,577,620) (14,782,530) (14,991,392)
 35,723,740 27,286,506 37,559,272 37,354,362 37,145,500
527,275,936 554,562,442 592,121,714 629,476,076 666,621,577

- - - - -
Year 24 Year 25 TOTAL (25 years)
2/5/91 2/5/92

(25,000,000)
(2,000,000)

(13,500,000)
800 800 20,800
0 0 (22,000,000)
0 0 (8,000,000)
0 0 (32,000,000)
(3,000,000)

0 0 (3,165,000)
(10,000,000)

(930,000)
(1,860,000)
(200,000)
(350,000)
(500,000)
0 0 (122,505,000)

85% 85%
4,467,600 4,467,600 111,690,000
14 14
62,546,400 62,546,400 1,451,970,000

(2,993,292) (2,993,292) (74,832,300)

(7,416,216) (7,416,216) (185,405,400)
(10,409,508) (10,409,508) (260,237,700)

(9,347,859) (9,534,816) (189,875,617)

(747,829) (762,785) (15,190,049)
(1,056,017) (1,066,577) (23,724,288)
(452,579) (457,104) (10,167,552)
(3,600,000) (3,600,000) (90,000,000)
(15,204,283) (15,421,283) (328,957,506)
 36,932,609 36,715,609 740,269,794
703,554,185 740,269,794

- -
D&A SCHEDULE
Year Investment Value Life Year
0 Membranes 8,000,000 5
0 All other investments 81,545,000 25
1 Membranes - 5
1 All other investments - 25
2 Membranes - 5
2 All other investments - 25
3 Membranes - 5
3 All other investments - 25
4 Membranes - 5
4 All other investments - 25
5 Membranes 8,000,000 5
5 All other investments 240,000 25
6 Membranes - 5
6 All other investments - 25
7 Membranes - 5
7 All other investments - 25
8 Membranes - 5
8 All other investments - 25
9 Membranes - 5
9 All other investments - 25
10 Membranes 8,000,000 5
10 All other investments 240,000 25
11 Membranes - 5
11 All other investments - 25
12 Membranes - 5
12 All other investments - 25
13 Membranes - 5
13 All other investments - 25
14 Membranes - 5
14 All other investments - 25
15 Membranes 8,000,000 5
15 All other investments 240,000 25
16 Membranes - 5
16 All other investments - 25
17 Membranes - 5
17 All other investments - 25
18 Membranes - 5
18 All other investments - 25
19 Membranes - 5
 19 All other investments - 25
20 Membranes 8,000,000 5
20 All other investments 240,000 25
21 Membranes - 5
21 All other investments - 25
22 Membranes - 5
22 All other investments - 25
23 Membranes - 5
23 All other investments - 25
24 Membranes - 5
24 All other investments - 25
25 Membranes - 5
25 All other investments - 25
Total 122,505,000
 1 2 3 4 5 6
1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 -
3,261,800 3,261,800 3,261,800 3,261,800 3,261,800 3,261,800
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - 1,600,000 1,600,000
- - - - 9,600 9,600
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
 - - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
4,861,800 4,861,800 4,861,800 4,861,800 6,471,400 4,871,400
 7 8 9 10 11 12
- - - - - -
3,261,800 3,261,800 3,261,800 3,261,800 3,261,800 3,261,800
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
1,600,000 1,600,000 1,600,000 - - -
9,600 9,600 9,600 9,600 9,600 9,600
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - 1,600,000 1,600,000 1,600,000
- - - 9,600 9,600 9,600
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
 - - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
4,871,400 4,871,400 4,871,400 4,881,000 4,881,000 4,881,000
13 14 15 16 17 18
- - - - - -
3,261,800 3,261,800 3,261,800 3,261,800 3,261,800 3,261,800
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
9,600 9,600 9,600 9,600 9,600 9,600
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
1,600,000 1,600,000 - - - -
9,600 9,600 9,600 9,600 9,600 9,600
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - 1,600,000 1,600,000 1,600,000 1,600,000
- - 9,600 9,600 9,600 9,600
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
 - - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
4,881,000 4,881,000 4,890,600 4,890,600 4,890,600 4,890,600
19 20 21 22 23 24
- - - - - -
3,261,800 3,261,800 3,261,800 3,261,800 3,261,800 3,261,800
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
9,600 9,600 9,600 9,600 9,600 9,600
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
9,600 9,600 9,600 9,600 9,600 9,600
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
1,600,000 - - - - -
9,600 9,600 9,600 9,600 9,600 9,600
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
 - - - - - -
- 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000
- 9,600 9,600 9,600 9,600 9,600
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
4,890,600 4,900,200 4,900,200 4,900,200 4,900,200 4,900,200
25 Total Depreciation
- 8,000,000
3,261,800 81,545,000
- -
- -
- -
- -
- -
- -
- -
- -
- 8,000,000
9,600 201,600
- -
- -
- -
- -
- -
- -
- -
- -
- 8,000,000
9,600 153,600
- -
- -
- -
- -
- -
- -
- -
- -
- 8,000,000
9,600 105,600
- -
- -
- -
- -
- -
- -
- -
 - -
- 8,000,000
9,600 57,600
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
3,300,200 122,063,400
122,063,400
Tax -100

Tax Credit earned 100

Tax credit (used) 0
Tax Balance 0 100