Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Prepare a Business Idea. Work out the details and determine the funds requirement and the life of the project. Minimum funding requirement should be
Prepare a Business Idea. Work out the details and determine the funds requirement and the life of the project. Minimum funding requirement should be of 50 lakhs Life of the project should be minimum 5 years STAGE 2 Based on the funds requirement determine the capital structure for your business. You can choose from equity, preference shares, debentures, loans or hybrid financing and alternate sources of financing. Minimum 20% should be borrowed funds Minimum 20% should be equity funds STAGE 3 Based on your capital structure determine the cost of raising the capital (interest, dividend and flotation cost) and calculate the overall cost pf raising the capital. STAGE 4 Prepare a loan amortization schedule for the loan amount and calculate how much amount goes towards interest repayment and capital repayment. STAGE 5 Prepare projected operating statement for the life of the project (minimum 5 years) show the EBIT-EPS relationship. Calculate operating, financial and combined leverage. (Excel calculation compulsory) STAGE 6 Calculate cash flows from the operating statement and find out NPV and IRR of the project to determine whether the business proposal is profitable or not. (Excel calculation compulsory)
Step by Step Solution
★★★★★
3.39 Rating (158 Votes )
There are 3 Steps involved in it
Step: 1
Based on the given information here is a business idea and the details worked out Business Idea A te...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started