PROJECT PROPOSAL TO THE ESTABLISHMENT OF HOTEL

LOCATION:
OROMIA NATIONAL REGIONAL STATE NORTH SHEWA ZONE
CHANCHO TOWN

PROMOTER: SHEWANGIZAW ADDIS HIKA

February, 2024
Chanco

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 Table of Content

Contents Page
Executive Summary……………….............................................................................................................................2
1. Background………………………………………………………………………………………..…………….3
1.1. Introduction……………….........................................................................................................................3
1.2. The Project Promoter..................................................................................................................................4
2. Project Description..............................................................................................................................................5
2.1. Main Objectives..........................................................................................................................................5
2.2. Project Location..........................................................................................................................................6
2.3. Investment Justification..............................................................................................................................6
2.4. Land Use Plan.............................................................................................................................................6
2.5. Market Prospect..........................................................................................................................................7
3. Project Establishment..........................................................................................................................................7
3.1. Project Buildings.........................................................................................................................................8
3.2. Construction Process...................................................................................................................................9
3.3. Establishment Phase...................................................................................................................................9
4. Project Operation…………………...................................................................................................................10
4.1. Manpower ………………………………………………………………………………………….......10
4.2. Organizational Structure...........................................................................................................................12
4.3. Project Operation Costs............................................................................................................................12
4.4. Economic Benefits....................................................................................................................................13
4.5. Cost-benefit and economic analysis..........................................................................................................13
5. Impacts of the Project........................................................................................................................................15
5.1. Environmental Aspect...............................................................................................................................15
5.2. Economic Aspect......................................................................................................................................15
5.3. Social Aspect............................................................................................................................................16

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Executive Summary
1 Project type Hotel

Name: Shewangizew Addis Hika

2 Project description Location: Chancho town, Oromia National Regional State

Requested land area:1,240.25M2

3 Job opportunity Permanent 22 temporary 7

Fixed capital: ---------- Birr 2 ,000 000

4 Amount of investment Working capital: ------ Birr 1,000,000

Total: ------------------- Birr 3,000 000

Bank loan and own equity:

5 Source of capital Own equity (30%): ------ Birr 900, 000

Bank loan (70%): -------- Birr 2,100,000

1. Background
1.1. Introduction
In our era, there are many challenges for humanity to face with. Among them, one of the most
critical problems in Ethiopia is the rapid aging of the population since mid- twentieth century. In
the future, the demographic dependency ratio, the number of children and pensioners per one
hundred persons of working age, will increase. This will be the major challenge for job seeking
systems, and even developed countries are not an exception.

It is common that elderly people prefer to be taken care at their home. Besides, the older the people
are the more special care services they need. Hence, it is a critical issue for the public sector to
provide necessary buildings to the area. From one survey made by the Local Government Pensions
Institution in 2012, Ethiopia is facing the shortage of in service sectors, and the situation has
reached a critical level. The twenty-first century is also known as an e-century, when technology is
applied in different fields, i.e., from discovery of our surrounding environment to society
management and even in the service sector. Nowadays, people can find many devices which help

3
them track their job easily, and self-tracking has become a new trend in many countries. Because of
the current needs and trends, service sectors building can be considered as an innovative solution
for reducing the burden on the job creating system. The core idea of this business is about a
modern and quality hotel use service to elderly and disabled people in the region.

The purpose of this project is to make an effective business plan based on a business idea.
Moreover, the promoter wants to analyze the possibility, potential profitability, demands, risks of
the venture, and to evaluate the success chances of this business plan when implementing it.

In order to achieve these goals, the following issues will be focused on in this project:

1. The current situation of the complete business creating system, potential need and demand
for hotel use centering the chancho town and its surroundings.
2. The target groups of this service.
3. The feasibility study, risk assessment, and its marketing and financial plan.
The public sector and private businesses must cope with numerous challenges to respond to
multifaceted new needs and demands of the societies. Due to such challenges and pressures, the
public sector is subjected to a large reform. Over the last two decades there appears to have been a
huge amount of public management reform. Ethiopia is one of the countries with improving
economic performance and development, and good investment activities both foreign and domestic
have been growing steadily. Though the government has given highest priority to the agricultural
sector, which is considered as a springboard to enhance the industrial sector, the importance of
distributive service such as transport service, hotel, trade, industry and the like would not be
underestimated.
The country has been registering an imperative growth, which makes it one of the rapidly growing
developing countries, and thus the dynamical growth of agricultural sector necessitates a matching
growth rate in other sectors to make them feed each other.
The service sector is a composition of two subsectors, namely, the distributive service mainly
comprising of transport, trade, hotel & restaurants, communication and the sector that mainly
includes banking & insurance, public administration & defense, education, health, domestic and
other services. The proposed hotel will be established in chancho town, Oromia National Regional
state.

4
 1.2. The Project Promoter
The promoter Addis Hika recently created this noble idea to invest on service sector in Ethiopia,
by establishing a hotel in the chancho town, Oromia National Regional state. Currently, they
live in Chancho Town where they lived for the last 20 years and held different professional
positions in the education, and consultancy sectors.
The idea of this promotion is originated from the reconnaissance assessment of market potential
of the project area and its surroundings. The excessive market potential in the market and
service sector in the very surrounding of the project is conducive for the establishment of a hotel
that will contribute to the maximization of elastic demand in terms of both service price and
income. Moreover, the very low initial investment that would be required to establish the super
market may further justify the financial viability of the investment.
The location proposed for this investment is the chancho town in the Oromia National Regional
state. The location selected as an ideal place for this investment for the following reasons: its
topographic suitability and climatic conditions; the fact that it hosts regional and national
organizations and industrial installations; also, it is on one of the main outlets to the Northern
Western region of the country.

2. Project Description
2.1. Main Objectives
The main and subordinating objectives of the project are:
 By building hotel the area providing better and quality services for the community/travelers/
of the area.
 To set up and develop a financially and economically sustainable mixed use and facilitate
socio- economic activities in the region.
 To provide employment opportunities, this would bring about specific and general
improvements of the quality of life in the region.
 To contribute to the creation of a fertile ground for project establishments in the area, this
will serve as a takeoff for further economic growth and development.

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 1.1. Project Location
The proposed project will be established in chancho town, Oromia National Regional state,
which is located at about 89 km north of the capital Addis Ababa on the main road that
connects the capital Addis Ababa with the northern western part of the country. In order to
support any endeavors this would contribute to the overall socio-economic development, the
government under the road sector development program has identified this corridor for
improvement. The chancho town is one of the fast-growing towns in Oromia. There are
adequate supplies of utilities like ample clean water supply, electric power, digital
communication (internet and telephony) and postal services. This will have a great
contribution to the success of the proposed project.

2.2. Investment Justification

The Fitche town is a sit for the administration and it is increasingly becoming the center of
socio-economic activities in the area. The population of chancho town is estimated to 500,000
and is growing at fast rate, which necessitates the increased need for basic services and
facilities for a rapidly growing population and such dynamic socio-economic center. To this
end the promoter of this project has decided to invest in the area of hotel services to address
the demands.

As there is a shortage of hotel the town and its surroundings, the provision of such facility to
the population will have an invaluable contribution. Moreover, the viability study and project
analysis indicate that this investment is justifiable on financial criterion. As the project
location, namely the chancho town is on the main road and renders quality services, it is
believed that the project can attract to large number of visitors and thus there is no anticipated
market problems for the services. This fact in turn extremely increases the demand to rent the
building complex for the same purposes as well. Therefore, chancho town is ideal locations to
establish super market provide the building for anyone who will super market services. Thus,
the promoter thoroughly investigated the potential of this project and came up with this noble
idea of investing on the project.

2.3. Land Use Plan

The total land plot size requirement proposed for the project is 1240.25.32 m 2. The overall
building construction area with its accessories requires around 1000 M 2 and the remaining

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 240.25 m2 will be parking and green areas. A summary of the land use plan for the project is
presented as follows:

Table 1: Proposed Land Use Plan

No. Description Size (m2) Remarks

1. Main building 1000 Different Purpose
2. Administration 240.25 Administrative service
building
Total 1240.25

1.1. Market Prospect

Considering possible inclusion of necessary utilities for hotel to avail for sale in response to
customers demand, certain main lists are only included for analysis purpose. The residents of
the chancho town and its surroundings are considered as potential customers of for the proposed
services. The market volume of the expected customers pull is expected to expand further as
socio- economic interaction of project location with others is strengthened from time to time.

The demand for hotel services in the area dynamically increased in the past few years. The
reason for this could be rapid economic growth and supporting public infrastructural
developments. Other factors relevant in the specific case of hotel services are the increase in
businesses, particularly firms in the industrial sector.

The major marketing strategies to promote the proposed hotel are keeping the quality of our
services and facilities, consistently improving in adaptation to changing situations and
promotion in association with the demand from the local community and nearby businesses. In
other case, working on target customers, business community, nearby business organization like
banks and insurances companies, government and non-government organizations will be the
major marketing promotion strategy of the project.

2. Project Establishment
The financial resource is a prime resource for undertaking any activities. Therefore, for
implementing this mixed use estimated it needs a total of Birr 3,000,000 of which 30% (Birr
900,000) will be covered by the promoter of the project whereas the rest 70% (Birr 2,100,000) will
be covered by a loan from a financial institution.

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This project will be implemented using materials and services to be procured entirely from the
domestic market in local currency, except for some hotel. The fixed investment costs on building
construction, equipment and furniture are summarized in Table 3 below.

Table 3: Summary of Initial Investment Costs

No. Description Amount

1. Total construction costs 1,500,000

2. Equipment 1,000,000

3. Office furniture 500,000

4. Initial operation capital 500,000

Total 3,000,000

1.2. Project Buildings

The proposed project has been well-studied, analyzed and designed and expected to provide
attractive hotel services of its kind. When the construction phase of the project is completed, the
building will consist of the following units:
o Main building
o 1 Casher office
o 1 Staff room with wardrobes and lockers
o 1 storage room
o 1 Toilet for employees (male/female separated)
 Administration building
o 1 Administrator office
o 1 Secretary office
o 1 Finance officer office
o 1 Meeting room
o 1 Staff room with wardrobes and lockers
 Utilities building
o 1 Canteen with complete functionality
o 1 Toilet for canteen guests
o 1 Guards’ post
o 1 Septic tank
 Other facilities
o Green area
o Parking area

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 The detailed specification of the dimensions of each building units will be worked out in
consultation with both building expert and Super market services expert.

1.3. Construction Process

The construction of the project buildings is a three stages development by which the
conceptualization need of the promoter of this project is translated into a functional facility that
will meet the specifications in terms of time, cost and quality.

Based on the construction idea and vision of the promoter, a qualified engineering firm is going
to be hired to make site studies, develop structural designs, prepare drawings and detailed
specifications, determine quantities involved and estimate the total cost. All these activities will
be done in the first phase of the project, which is design stage after the documents are produced
by the designers have been received, and the works secured the project is supposed to enter the
tendering stage. At this stage contractors study the project document analyze and subsequently
determine the construction methods, build up their unit rates and submit their bids and award the
contract for the lowest responsible bidder. After the award is made and the contract signed
between the project owner and the contractor, the project contractor is expected to prepare and
submits a detailed construction schedule which includes material and manpower requirements
and cash flow forecast.

The project owner researched typical architectural layouts for hotel and executive office spaces.
The structural design of the building will be coordinated with the layout of the building. The
frame will made up of a grid with repeating standard structural bays included in the structural
system are by size, shape and size of structural members, floor compositions and curtain walls.
These elements will be established to resist gravity and lateral loads as appropriate. The
structural steel frame was chosen for further design based on cost per square foot, local
availability of material and constructability considerations, such as erection and fabrication.
Foundation of the design takes more into consideration the applied loads, the loading from the
columns, while the main part of the project focused on the structural frame and its alternate
designs, preliminary foundation plan was designed based up on maximum loads carried from the
supper structure through the columns.

1.4. Establishment Phase

It is expected that project will be operational 3 years after signing agreement with the licensing
authority. The major activities after completion of the license acquiring process are the following:

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 1. Site preparation
2. Specify/design buildings
3. Construct buildings
4. Purchase medical equips.
5. Purchase furniture
6. Recruiting manpower
7. Mobilization
8. Start operation

Note that the years are divided into quarters in the following chart.

2024 2025 2026

Activities
1 2 3 4 1 2 3 4 1 2 3 4
Procurement
Site preparation
Specify/design buildings

Construct buildings

Purchase medical equip.

Purchase furniture

Recruiting manpower

Mobilization
Start operation

4. Project Operation
4.1. Manpower
The government of Ethiopia has issued a new labor proclamation on 377/2003 in which the
duties and responsibilities of workers and employers are distinctively explained. In this
proclamation, the employer is obliged to respect the worker’s human dignity, to defray the cost
of medical examination, to provide the proclamation, agreements and rules.
Similarly, the workers include to perform the work specified in the contract, to follow the
employer’s instruction and to report work, to handle with due care all instruments and tools, and
to observe the provisions of the proclamation, agreements and rules.

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 It must be note that presently in the country, there is no labor problem as such that threatens the
smooth running of the activities of the enterprise. The availability of trained labor force will
enhance the successful implement of the project.
The manpower requirements of the owner of the project for this motel service center building is
organized in the manner that it consists of general manager, technical personnel, office workers
and other contract daily and monthly laborers. The manpower requirements of the project that
will run the overall managerial and technical day to day activities of the project during the
operation period are shown here under in the following table.

Table 2: Project Manpower

Salary
No. Job Description Qualification Number Monthly Annual
1 Admin. Manager Management. 1 10,000 120,000
2 Secretary Dipl. In Sec. science 1 4,000 48,000
3 HR officer BA in Admin 1 5,000 60,000
4 Financial officer BA in Accounting 1 5,000 60,000
5 General practitioner MD degree 3 8,000 288,000
6 Marketing B. Sc. Degree 3 5,000 180,000
7 Archive officer Technician 1 3,000 36,000
8 Maintenance Technician 1 3,000 36,000
9 Purchaser Purchasing 1 3,000 36,000
10 Cashier Technician 1 3,000 36,000
11 Storekeeper Technician 1 3,000 36,000
12 Customer guide Any 1 2,000 24,000
13 Guard Any 4 2,000 96,000
14 Cleaner Any 2 1,500 36,000
Total 22 1092000

1.1. Organizational Structure

It is evident that for a proper and successful implementation of the project, due consideration
must be given to organization and management. Accordingly, the overall project will be carried
out by competent employees having long relevant experiences in their respective fields. The

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 administrative manager will be responsible for the overall management of the project. The
financial officer will be accountable to the manager and will be responsible for all financial
aspects of the project. Any financial statement, bank interactions, personnel expenses etc. will be
directed to the financial officer. The financial officer will also be responsible for issuance of
financial reports to any concerned personnel, government agencies and to an external auditor.
Accordingly, the promoter planned to recruit competent staffs with relevant skills and experiences
(HR, accountant, physicians, nurses, clerks, guards, etc.) for a smooth operation of the project.
This project, when fully operational, creates job opportunity for a minimum of 22 permanent
employees and temporary employment for up to 50 workers during the project establishment
phase.

4.1. Project Operation Costs

The capital required to establish the project and make it fully operation is estimated to be Birr
2,000,000. Annual operating cost of the project, including cost of raw materials, consumables and
employees’ salary is estimated to be Birr 808,000, except for the first year which is estimated to
be Birr 100,000 due to a gradual scaling up of services and manpower in the first year.
Table 4: Overview of Estimated Running Cost

No. Description Monthly Annually

1. Employees’ salary 86,000 0

2. Medical equipment and consumables 30,000 360,000

3. Property Insurance 20,000 240,000
4. Repair and maintenance 20,000 240,000
6. Utilities (water, electricity, phone etc.) 20,000 240,000
7. Stationery and postage 5,000 60,000
8. Detergents 10,000 120,000
9. Working clothes for employees 20,000 240,000
10 Travel expenses 10,000 120,000
12 Miscellaneous 5,000 60,000
Total 226,000 2,808,000

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 Table 5: Estimated Depreciation of Fixed Capital

Depreciation
No. Description Value
% Amount

1. Building 2,000,000 5 200,000

2. Equipment &Furniture 500,000 3 15,000

Total 215000

Table 6: Repair and Maintenance

Depreciation
No. Description Value
% Amount

1. Building 2,000,000 3 120,000

2. Equipment &Furniture 5,00,000 2 10,000

Total 130000

1.2. Economic Benefits

The proposed project creates employment opportunity for 22 persons when it will have become
fully operational and up to 50 jobs for (un)skilled persons during the establishment phase. In
other economic direction the project will generate Birr 600 000, which will generate tax revenue.
The project will contribute to the ever-expanding demand of hotel services, which is a vital factor
for social development.

An investment project will be considered beneficiary to the society if its socio-economic benefits
exceed its costs. The question is, how should the socio-economic benefits and costs be measured,
and what common unit of account should be used to express the benefits and costs.

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1.1. Cost-benefit and economic analysis
The projected financial revenues and costs are often a good starting point for identifying
economic benefits and costs, but two types of adjustments are necessary. First it is necessary to
include or exclude some costs and benefits. Second it is necessary to revalue inputs and outputs at
their opportunity costs.
Financial analysis, which looks at a project from the perspective of the implementing agency
identifies the project’s net monetary flows to the implementing entity and assesses the entities
ability to meet its financial obligations and to finance future investments. Economic analysis, by
contrast, looks at a project from the perspective of the entire economical viewpoint and measures
the effects of the project on the economy. These different viewpoints require that analysts take
into consideration different items when analyzing costs of a project, use different valuations for
the items considered, and in some cases, even use different rates to discount the streams of costs
and benefits. In financial analysis we are interested in the items that entail monetary outlays. In
economic analysis, we are interested in the opportunity costs for the country. Even if the project
entity does not pay for the use of resources, this does not mean that the resource is free good. If a
project diverts resources from other activities that produce goods or services, the value of what is
given up represents an opportunity cost of the project to society.
The important difference between financial and economic analysis is in the price that the project
entity uses to value the inputs and outputs. Financial analysis is simply based on the actual prices
that the project entity pays for inputs and receives for outputs. The prices used for economic
analysis, however, are based on the opportunity costs to the country. The economic values of both
inputs and outputs usually differ from their financial value or market prices because there are
different market imperfections.
There are government interventions of various kinds, e.g., taxes, subsidies, tariff, price control,
etc. and some goods are public goods by their nature or may not totally have market or the price
consumers are willing to pay are less. The divergence between financial and economic prices and
flows shows the extent to which someone in society, other than the project entity, enjoys a benefit
or pays a cost of services the project provides. And hence enable the analyst to identify ‘winners
and “losers”.
The magnitudes and incidence of transfers are important pieces of information that shed light on
the project's fiscal impact, other distribution of costs and benefits and hence on its likely
opponents and supporters. By identifying the groups that benefits from the project and groups that

14
pay for its costs, the analyst can extract valuable information’s about the incentives that these
groups must see to it that the project implemented as designed. Project, comprising all the
separable components, must be appraised as a package.

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2. Impacts of the Project
2.1. Environmental Aspect
The issue of environment and development should get a due emphasis and thus every citizen
called to exert their maximum effort for fighting against any negative impact any investment may
have on the environment to result in a win - win situation on common agenda that is creating
environmentally friendly business.
In recent years, environmental concerns have assumed a great deal of significance. In most
developed countries, and for projects financed by foreign donors in developing countries, an
environmental impact assessment is a prerequisite for project financing. Environmental impact of
a project refers to the effect of the project on the ecosystem of animals, plants, water, air, and
humans existing in the project area. Ecological analysis should be done particularly for major
projects, which may have significant ecological implications like power plants and irrigation
schemes, and environmental polluting industries. In such projects, environmental impact
assessment is important because economic benefits that may be generated from the project can be
counter-balanced by undesirable environmental effects.
The key questions raised in ecological analysis are:
 What is the damage most likely caused by the project to the environment?
 What is the cost of restoration measures required to ensure that the damage to the
environment is contained within acceptable limits?
In the case of the investment proposed in this project, the impacts are noise and dust emitted to the
surrounding surface from the construction site. These impacts can be addressed by sprinkling
water around the surface of the project site and by decreasing sound during construction.
During project operation solid waste material will be accumulated in a controlled area and burned
in the outlet equipped for this purpose. The liquid waste from the project operation will be
removed by a proper drainage system and streamed into the proper spot– under surface depot.

1.1. Economic Aspect

The economic aspect of project preparation is primarily concerned with the determination of the
likelihood of the proposed project, and hence the committing of scares resources, by justifying the
significance of the project from the whole economic development point of view (the society as a
whole). In such evaluation the focus is on the social costs and benefits of the project, which may

16
often be different from its monetary or financial costs, and benefits. The financial analysis views
the decision makers have are concerned with the investment of scarce capital and other resources
that will best further national objectives. This is true whether the resources committed are being
invested by government directly or by individuals within the economy. Project form the
participants (or owners) point of view, while the economic analysis forms the society’s point of
view. While financial analysis uses projected market prices to value inputs and outputs, economic
analysis uses ‘economic prices’ or ‘shadow prices’ or ‘efficiency prices’ to better approximate the
opportunity costs of an input – the amount the economy must give up if the resource is transferred
from its present use to the project. Similarly, to value project’s output, economic analysis uses the
marginal value of a given output to approximate the real value – the value that consumers place on
that commodity. Thus, economic analysis requires adjustment of market prices, which may not
reflect the real value of resources and outputs, into economic prices. It also requires determination
of economic prices of those goods that might not have market prices but that involve commitment
of real resources.

1.2. Social Aspect

Project analysts are also expected to examine the broader social implications of a proposed project.
Although the economic analysis will determine the amount of income stream generated over and
above the costs of labor and other inputs, it does not specify who receives it and hence it does not
address the issue of income distribution. So, the social aspect analysis should address the income
distribution implications of a project. Other closely related aspects as employment opportunities,
gender aspects, stimulating or competing effects with other sectors, and other desired objectives
must be considered.

17
2. Annex
Efficiency ratio Index Value Remark

Return on sales 0.23 Positive contribution to gross revenue, with 10% net
profit from gross revenue

Return on assets 0.29 Positive contribution to assets with 15% net profit to
the Assets

Return on equity 0.46 Positive contribution. As the project is fully financed

by the owner 46% contribution to equity is highly
encouraging could initiate the promoter to invest
more.

Return on total investment 1.53 Able to generate excess income after covering its
initial investment cost taking into account the project
life

Net present Value (NPV)

Net present value (NPV) indicates the total present (discounted) Value of a time series of cash flows. NPV
aggregates cash flows that occur during different periods of time during the life of a project in to a common
measuring unit i.e. present value. It is a standard method for using the time value of money to appraise long-
term projects. NPV is an indicator of how much value an investment or project adds to the capital invested.
In principle a project is accepted if the NPV is non-negative. Accordingly, the net present value of the
project at 12.5% social discount rate is found to be Birr 24 million which is acceptable and commend the
project implementation.

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 1. Profit and/ or loss statement projection

Description Project years

1 2 3 4 5 6
2024 2025 2026 2027 2028 2029
Gross Revenue 7,000,000 8,000,000 9,000,000 10,002,400 11,202,640 12,122,904
Less operating 709,125 647,980 238,895 432,492 335,770 984,211
costs
Profit before depr. 6,298,875 6,622,420 8,945,105 8,569,908 5,866,870 7,138,693
& Amort.
Less Depr & 5,084,726 5,084,726 5,084,726 5,084,726 5,084,726 5,084,726
Amortorix
Profit before 1,514,949 1,537,695 3,860,380 3,485,182 45,782,145 7,053,967
Interest rate
Less Interest 3,937,500 3,445,313 2,953,125 2,460,938 1,968,750 1,476,563
Profit before tax (2,422,551) (1,907,618) 907,255 2,024,245 3,813,395 6,577,405
Less tax (726,765) (572,285) 272,176 4,307,273 3,144,018 2,873,221

Net Income (1,695,786) (1,335,333) 635,078 4,716,971 3,669,376 8,704,183

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 Annex 2. CASH FLOW STATEMENT

Description Project years

- 1 2 3 4 5 6
Cash Inflow
Owners equity 1,050,000 - - - - - -
Loan 2,450,000 - - - - - -
Net Profit - (1,695,786) (1,335,333) 635,078 14,716,971 30,669,376 8,704183
Depreciation & amortization. - 5,019,496 4,307,357 3,704,084 3,171,872 2,513,041 2,170,478
Total Cash Inflows 5,000,000 3,323,710 2,972,024 4,339,162 7,908,843 3,182,417 12,874,662
Cash Out
Flow
Fixed Assets 10,651,375
Pre-Operating 652,294
Working cap. Incres - - 596,568 1,727,684 354,840 372,582 391,211
Replacement Costs - - - - - - 2,490,000
Loan Repayment 7,875,000 7,382,813 6,890,625 6,398,438 5,906,250 5,414,063
Dividend (678,314) (534,133) 254,031 5,886,789 12,267,750 19,481,673
Total Cash Outflows 41,303,669 7,196,686 7,445,248 8,872,340 12,640,066 18,546,582 27,776,947
Net Cash Flow 3,696,331 (3,872,975) (4,473,224) (4,533,178) 5,268,777 14,635,835 23,097,715

Cumulative Flows - (176,644) (4,649,868) (9,183,046) (3,914,269) 10,721,566 33,819,281

Retained earning 1,017,471 801,200 381,047 8,830,183 18,401,626 29,222,510

Cumm.ret. earning 1,017,471 1,818,671 420,153 9,211,230 27,231,808 47,624,136

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 Annex 3. BALANCE SHEET
Description Project years

0 1 2 3 4 5 6

Assets -

Current Assets

Cash - (1,695,786) (1,335,333) 635,078 4,716,971 5,669,376 8,704,183

Inventory 3,717,026 4,709,125 5,647,980 6,238,895 7,432,492 8335,770 9,984,211

Total Current 3,717,026 3,013,340 3,312,647 3,873,973 8,149,464 3,005,146 4,688,395

Assets

Fixed Assets

Land Development 666,674 653,340 640,007 540,007 440,007 340,007 240,007

Build & Construction 2,000,021 1,250,021 500,021 (249,979) (999,979) (1,749,979) (2,499,979)

Machineries &equip. 28,134,680 27,195,372 26,256,064 25,316,756 24,377,448 23,438,140 22,498,832

Vehicle 7,450,000 4,960,000 2,470,000 (20,000) (2,510,000) (5,000,000) (2,008,000)

Office fur. & equipment 400,000 360,000 320,000 280,000 240,000 200,000 160,000

Total Fixed Assets 7000,000 8,418,734 9,186,092 10,866,784 11,547,476 17,228,168 18,390,860

Total Assets 12,368,402 34,432,074 21,498,740 35,740,757 37,696,940 46,233,314 41,079,255

Bank Loan 31,500,000 27,562,500 23,625,000 19,687,500 11,812,500 11,812,500 7,875,000

Total Liability 31,500,000 27,562,500 23,625,000 15,750,000 11,812,500 11,812,500 7,875,000

Equity 1,050,000

Contribution 1,050,000 1,050,000 1,050,000 1,050,000 1,050,000 1,050,000

Retained earning 279,818,402 275,819,573 296,823,739 335,003,257 362,896,940 393,370,814 32,154,255

Total Capital 280,868,402 276,869,573 297,873,739 336,053,257 363,946,940 394,420,814 43,204,255

Total Liability & Capital 12,368,402 14,432,074 21,498,740 35,740,757 37,696,940 4233,314 41,079,255
[[

Annex 4. COMPUTATION OF FINANCIAL INTERNAL RATE OF RETURN

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Description Project Years
0 1 2 3 4 5 6
Benefits -
Revenue - 26,728,800 38,365,600 38,184,000 38,911,600 47,248,340 54,335,59--
Salvage Value - - - - - -
On Fixed Asset
Recovery in
Working capital - - - - - - -
Total Benefits 26,728,800 34,365,600 38,184,000 38,911,600 47,248,340 54,335,591
Costs
Inc. on Work cap. 45,000,000
Inc. in Work Cap. - - 596,568 1,727,684 354,840 372,582 391,211
Operating Costs 27,709,125 29,647,980 32,238,895 34,432,492 35,335,770 37,984,211
Profit tax - (25,368) (200,300) 95,262 2,207,546 4,600,406 7,305,627
Total Cost 45,000,000 27,454,758 29,044,248 33,061,840 34,994,878 36,308,758 38,681,050
Net benefit after tax (45,000,000) (34,725,958) 11,321,352 7,122,160 42,916,722 83,939,582 132,654,541
Net benefit before tax (45,000,000) (34,980,325) 11,121,052 7,217,421 45,124,268 46,539,988 47,960,169

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