Project Appraisal and Risk Analysis Class Room Assignment XYZ Company is engaged in a manufacturing business and main raw materials are X, Y and Z. Details production process is as follows. Type Per Product (Rs.) No. of days allowed Raw Material (Cost Per Kg.) X Y z 4.00 8.00 4.00 8.00 5.00 30 30 30 Labour cost Overheads Number of working days per year is 340 days and it 10 days for manufacturing process and finished good stocks are held for 15 days. Plant capacity is 75,000 numbers of items per annum and other overheads are 10% of ex-factory cost. Average debtors collection period is 60 days and the 50% of sales are on credit basis. Product price is Rs. 55.00 65 Company requires finance for purchasing of following fixed assets along with the permanent working capital. . Type of investment Land Building Machinery Vehicles Furniture Cost (Rs.) 400,000 750,000 2,000,000 1,000,000 250,000 . Rate of depreciation is 20% for all machinery, furniture and vehicles. Means of finance will be 50% from equity contribution and the balance will be a bank funds. Rate of interest charges by banks is 10% for both investment and working capital financing Both loans are extended for a repayment period of 5 years 1 . The company expects return on equity of 20% and inflation rate id assumed as 4%. Utilization of plant capacity for manufacturing in each year is assumed as follows. Year 1 2 3 4 5 Utilization capacity 70% 80% 90% 90% 100% You are required to develop the following financial calculations on a spared sheet. 1. Calculation of weighted average cost of capital 2. Forecast the inflation rate for next five years 3. Develop a production schedule 4. Develop depreciation schedules 5. Develop the loan schedule 6. Develop the projected profitability statement 7. Calculate the working capital requirement for five years 8. Develop the projected cash flow statement 9. Calculate the DSCR, NPV and IRR 10. Develop the projected Balance sheet 11. Do a sensitivity analysis Individual Assignment 1. Develop a Credit proposal by using the above spread sheet. You may assign hypothetical words and names. 2. Using the financial models developed in class, a different scenario should be developed 3. Structure a financial package according to your bank's credit policy guidelines. 4. Do a sensitivity analysis based on the prevailing economic, political and business conditions in Sri Lanka. Project Appraisal and Risk Analysis Class Room Assignment XYZ Company is engaged in a manufacturing business and main raw materials are X, Y and Z. Details production process is as follows. Type Per Product (Rs.) No. of days allowed Raw Material (Cost Per Kg.) X Y z 4.00 8.00 4.00 8.00 5.00 30 30 30 Labour cost Overheads Number of working days per year is 340 days and it 10 days for manufacturing process and finished good stocks are held for 15 days. Plant capacity is 75,000 numbers of items per annum and other overheads are 10% of ex-factory cost. Average debtors collection period is 60 days and the 50% of sales are on credit basis. Product price is Rs. 55.00 65 Company requires finance for purchasing of following fixed assets along with the permanent working capital. . Type of investment Land Building Machinery Vehicles Furniture Cost (Rs.) 400,000 750,000 2,000,000 1,000,000 250,000 . Rate of depreciation is 20% for all machinery, furniture and vehicles. Means of finance will be 50% from equity contribution and the balance will be a bank funds. Rate of interest charges by banks is 10% for both investment and working capital financing Both loans are extended for a repayment period of 5 years 1 . The company expects return on equity of 20% and inflation rate id assumed as 4%. Utilization of plant capacity for manufacturing in each year is assumed as follows. Year 1 2 3 4 5 Utilization capacity 70% 80% 90% 90% 100% You are required to develop the following financial calculations on a spared sheet. 1. Calculation of weighted average cost of capital 2. Forecast the inflation rate for next five years 3. Develop a production schedule 4. Develop depreciation schedules 5. Develop the loan schedule 6. Develop the projected profitability statement 7. Calculate the working capital requirement for five years 8. Develop the projected cash flow statement 9. Calculate the DSCR, NPV and IRR 10. Develop the projected Balance sheet 11. Do a sensitivity analysis Individual Assignment 1. Develop a Credit proposal by using the above spread sheet. You may assign hypothetical words and names. 2. Using the financial models developed in class, a different scenario should be developed 3. Structure a financial package according to your bank's credit policy guidelines. 4. Do a sensitivity analysis based on the prevailing economic, political and business conditions in Sri Lanka