1. 3

2. 2

3. 1

4. WELCOME

5. GROUP 5

6. Atikur Rahman

7. Rafiqul Islam

8. Rehnuma Hoque

9. Razibul Islam

10. So, what are we dealing with?

11. “ Financial Estimates And Projection”

12. Why is it necessary in a project?

15. 3. Can we earn a satisfactory return on the investment made in the project?

16. 1. Technical appraisal 2. Market and demand appraisal 3. Financial appraisal

17. Let’s hear a story about a Project

18. Mr. Geek

19. Miss. Cute

20. Geek & Cute Ltd.

21. One day Mr. Geek was driving his car

22. At that time he saw that there were Green Coconuts selling on the street

23. But he couldn’t because that won’t be polite

24. Then again he saw there was Sugar Cane juice selling on the street

25. And again he couldn’t because that is unhygienic

26. Suddenly he got an idea and called his business partner Miss. Cute

27. And his idea was

28. To sell these Green Coconut water Sugar Cane Juice Date Juice

29. Into these forms Green Coconut water Sugar Cane Juice Date Juice

30. And Miss. Cute happily agreed with Mr. Geek’s plan

31. So, let’s get started

32. Estimated Cost of the Project

33. Estimated Means of Finance

34. Now, we are going to find out

35. 1. Profitability Estimates 2. Projected Cash Flow 3. Projected Balance Sheet

36. Profitability Estimates

37. The company would work for 300 days on a 2 shift basis. The installed capacity on this basis works out to 2880 TPA. The company will start production on April 1, of the year 1. The expected capacity utilization will be 50 percent in the first year, 60 percent in the second year and 70 percent for the third year and beyond.

38. 2880*.50=1440 2880*.60=1728 2880*.70=2016

39. The average sales realization per kg of the product will be 12, net of excise duty.

40. 1440*12/1000=17.28 1728*12/1000=20.74 2016*12/1000=24.19

41. The cost of raw materials and consumables will be 65 percent of sales; the cost of power will be 4 percent of sales.

42. 17.28*.65=11.23 17.28*.04=.69

43. Wages and salaries are expected to be 0.9 million, 1 million and 1.2 million for the first, second, and third operating years. Thereafter, they would rise at the rate of 5 percent per year.

44. 1.2+(1.2*.05)=1.26

45. Factory overhead expenses will be 50000 for the first year. They will increase at the rate of 6 percent per year subsequently. Administration expenses will be 100000 per year. Selling expenses will be 10 percent of sales.

49. The term loan will be repaid in 16 equal half yearly installments, with the first installment falling due at the end of the second operating year. The interest rate on the outstanding term loan will be 14 percent.

50. Term Loan Calculation

51. 6.4/16=0.4 .4 .4 6.4*.14*.50

52. The bank finance for working capital will cost 18 percent.

53. The suppliers of raw materials and consumables will provide trade credit for half a month.

54. Working Capital Calculation

55. (11.23*1.5)/12 (11.23*.03)/12 (11.23*.5)/12 (17.28*1)/12

56. 3.39*.25

57. 1.4*.5/1.5

60. The depreciation for company law purposes are as follows:

61. The depreciation rates for income tax purposes are as follows, under the written down value method:

62. Depreciation calculations

64. 8.49 0.39*1.15/8.49

65. 0.39*.75/8.49

67. 1.83*.0334 7.59*.0809 0.49*.0515

68. Building: 1) 1.83*.1=0.183, 2) (1.83-0.183)*.1=0.165 Plant and Machinery and Misc. fixed assets: 1) (7.59+.49)*.333=2.693, 2) (8.08-2.693)*.333=1.795

71. The preliminary expenses may be written off in 10 equal installments

72. 0.2/10=0.02

73. The income tax rate applicable is 45 percent. Further 30 percent of Gross Total Income will be allowed as deduction.

74. Tax Calculations

78. -1.59-0.12=-1.71

80. 0.78*.30=0.234

81. 0.55*0.45=0.25

83. The firm plans to pay dividend from the second year. The dividend rate is proposed to be 12 percent for second year. Thereafter, it would be enhanced by 2 percent every alternate year.

86. Projected Cash Flow Statements

87. .59+.90+.37 2.48-2.07 2.92-2.48

88. 11.44-.85-.20 6.4-6.4 6.4-6.0 6.0-5.2 3.39-.47 4.06-.56-2.92 4.78-.66-.58

89. .85 .85+.46 1.31+.81

90. Projected Balance Sheets

91. .59+.66 1.25+1.18

94. It’s decision time

95. After analyzing the Profitability Estimates, Projected Cash flow statements and Projected Balance Sheet, Mr. Geek and Miss Cute find the project feasible

96. And they decided to go for it

97. Coffee with Dr. Mahfuzul Hoque

98. Public Opinion

99. Thank You