This assignment is to be submitted within seven days. 40% marks will be deducted if submitted late. Three Businessmen would like to start a project for the manufacture of Citric Acid from citrus fruits in Pakistan. They are able to invest Rs. 5 millions each on this project. Initial market studies have revealed that all requirements of citric acid are met by import from China and USA. During last three years the import was 900,800 and 600 tons. The current cost of imported product is Rs200 per kg. (USA) and Rs. 120 (China) Raw material is available locally and would cost Rs. 10 per kg. The yield of finished product is likely to be 15%. Manufacturing cost of product is Rs. 15 per kg of product, which is exclusive of manpower cost. For 1200 tons per year production, the manpower requirements and average monthly salaries of various categories are as under: The cost of plant having capacity of 1500 tons per year, would be Rs. 30.0 millions, and Land, Buildings and other ancillary facilities would cost Rs. 10 millions. It would take about 15 months to start commercial production from the date of order of plant. PreOperational expanses are likely to be 5 millions. - Estimate Project Cost and outline a plan for financing of the project (2 marks) - What should be the installed capacity of plant? ( 1 mark) - Prepare a monthly sale and production plan for first year of project. (1 mark) - Determine Manpower cost, unit variable cost of product, and fixed cost.(2 marks) - For 10 million profits per year what should be the sale price of product.(1 mark) - How much working capital will be required? Assuming that 15 days of finished product and 30 days requirement of raw material are kept in stock. (2 marks) - What will be the yearly profit in next three years? (1 mark) What will be the breakeven sale volume? - Assume a mark up rate of 10% per year on bank loan. Depreciation of 10% per year on plant, 5% on buildings and 20% on fittings and fixtures. - Any assumptions should be clearly stated. This assignment is to be submitted within seven days. 40% marks will be deducted if submitted late. Three Businessmen would like to start a project for the manufacture of Citric Acid from citrus fruits in Pakistan. They are able to invest Rs. 5 millions each on this project. Initial market studies have revealed that all requirements of citric acid are met by import from China and USA. During last three years the import was 900,800 and 600 tons. The current cost of imported product is Rs200 per kg. (USA) and Rs. 120 (China) Raw material is available locally and would cost Rs. 10 per kg. The yield of finished product is likely to be 15%. Manufacturing cost of product is Rs. 15 per kg of product, which is exclusive of manpower cost. For 1200 tons per year production, the manpower requirements and average monthly salaries of various categories are as under: The cost of plant having capacity of 1500 tons per year, would be Rs. 30.0 millions, and Land, Buildings and other ancillary facilities would cost Rs. 10 millions. It would take about 15 months to start commercial production from the date of order of plant. PreOperational expanses are likely to be 5 millions. - Estimate Project Cost and outline a plan for financing of the project (2 marks) - What should be the installed capacity of plant? ( 1 mark) - Prepare a monthly sale and production plan for first year of project. (1 mark) - Determine Manpower cost, unit variable cost of product, and fixed cost.(2 marks) - For 10 million profits per year what should be the sale price of product.(1 mark) - How much working capital will be required? Assuming that 15 days of finished product and 30 days requirement of raw material are kept in stock. (2 marks) - What will be the yearly profit in next three years? (1 mark) What will be the breakeven sale volume? - Assume a mark up rate of 10% per year on bank loan. Depreciation of 10% per year on plant, 5% on buildings and 20% on fittings and fixtures. - Any assumptions should be clearly stated