Expected life of new business is 15 years.

Break up of initial investment:	US$
Capital expenditure	90,000,000
License	50,000,000
Working capital (all as current assets)	5,000,000

All of initial investment is contributed by Equity.

Revenue:

500,000 in year 1 and is expected to grow by 10% during first 5 years and by 6% thereafter, however, volume cannot exceed beyond 900,000 per year.

Average starting price per ticket is set as $55 with 5% increment on annual basis.

Direct and operating costs for running the business are as follows:

• Direct costs 20% of revenue.
• Royalty Minimum of $2,500,000 or 5% of revenue.
• General and administration - $1,000,000 in first year with 5% yearly increase.
• Marketing $3.0 per ticket with 5% yearly increase.
• Routine operation & maintenance - 12% of revenues.
• Depreciation Based on 10 years property class.
• License amortization 15 years.
• Tax 30%, chargeable to profits only.

Assets and liabilities:

• Current assets 25% of revenue.
• Current liabilities 15% of first five cost elements stated above.
• All of the current assets and liabilities will be reversed to zero in the final year of the project.
• Dividends are paid @90% of net cashflow from operating activities as per cashflow statement.

Required:

An integrated financial statements model to be developed, with separate areas earmarked for inputs, working model and outputs. Output which is the information to BoD should include;

1. Financial evaluation indictors comprised of NPV, IRR and payback. The company uses a discount rate of 8%.
2. Bar graphs for revenue development, ticket volumes, net profit and cumulative cashflow.