Reference no: EM132926363
Question - The Project: You have project which requires incomes and outflows of money. You are asked to detail all of this money on timelines and value the funds at the beginning of the project.
Assume an interest rate of 5% c.m for the NPV calculation. The entire project is over 1 year. Show FULL details at every time point where there is a money event occurring.
Outgoing funds: (Expenses)
1) Re-Paying back the face value of a $1,000,000 bond repayable 1 year from the start of the project
2) Paying interest coupons quarterly at 3% c.q
3) Salaries of staff of $10,000 payable each Month
4) Office expenses of $5,000 payable each Month
5) Loan payments on a loan of $200,000 at 4% c.q. paid quarterly to be repaid in full in 1 years
6) Initial start up expenses for building and equipment of $100,000
Incoming Funds (Revenues)
1) $1,000,000 bond from investors (referred to it 1) above)
2) $200,000 loan from bank (referred to in 5) above)
3) Revenue from product at $30,000 each month for 1 year Your project Document for Hand-In needs to include: (100 Marks) Make sure to have all documents in PDF format
a) A detailed time line of all of the Outgoing funds and Incoming Funds. Use different Colors or styles to distinguish them (Or use outgoing above the line and Incoming below the line). Make Time line readable . Show every month and quarter and yearly values clearly. Use landscape orientation to allow for more room. There are 9 Funds in all (6 outgoing 3 incoming).
b) Determine the Net Present Value of the Project at time 0. Use 5% c.m for this valuation. Show details of the fund. Show the value as Incoming funds minus the outgoing funds using present values of all. Show complete details of all calculations. On a separate page from the detailed timeline, clearly Show the value of EACH fund and the corresponding Equation detailing than the value of the fund is determined.
c) COMMENT on the value of the project from a financial point of view in a one Page typed executive report. Add suggestions as to how the financial aspect of the project could be improved. Support your comments Based on Your findings from parts a) and b).