M Adil MAFE-S19-

Abdul Haseeb MAFE-F18-016

Sidra Batool MAFE-S19-009
Kiran Shahzadi MAFE-F18-
Waheed Akhter MAFE-F18-023
CAPITAL INVESTMENT APPRISAL 1
BRIGHT CLEANING SERVICES
Business Idea;
Bright Cleaning Services organize a online setup to support customer in a way to support
in various cleaning services such as House Cleaning ,Car Washing ,and Laundry services
at door step by effective mean. Our main office is in Sadique trade center top flour and
we initially start business in Lahore.
 Our Vision

To provide exceptional service that exceeds our customer’s expectations

Our Mission

Our aim to deliver online effective services and trained workers to support
customer effective engagement and relationship management. Through designing the
ideal Washing service facilities on time, in addition to offering organized, flexible, and
efficient service as well as distinguished maintenance, By hiring Expert wants you to be a
beacon in the service industry by ensuring 24/7 if necessary.  To serve our mission
properly to all of our clientele,. Everything we do, our intent is to develop meaningful
relationships needs of customers.
Initial Investment;
A projection of initial investment required to move forward the project (Bright Cleaning
Services ) containing detail of one-off costs plus some working capital requirement
,These are the major cost which are used to start the projects.

ONE-OFF COSTS
Sr. Items Rate(Rupees) Qty Amount(RS)

1 Sazghar Rikhaw (installment) 350000 01 Rs 50000*

2 Generator 50000 01 Rs 50000
3 Pressure Pump, 26500 01 Rs 26500
4 Air Pressure Motor, Blower 5500 01 Rs 5500
5 Vacuum Cleaner 11500 01 Rs 11500
6 Ladder 5500 01 Rs 5500
7 Water tank 4500 01 Rs 4500
8 Light rods Plus Extension 3500 01 Rs 3500
9 Mobile Phones 12000 01 Rs 12000
10 Trade Mark Reg 30000 - Rs 30000
11 Android Application 100000 - Rs 100000
12 Tools + Miscellaneous 20000 - Rs 20000
13 Motor Bike 45000 01 Rs 45000
14 Head office Rent Plus Building 30000 01 Rs 70000
15 Staff Salary 20000 - Rs 20000
16 Marketing Expenditure 210000 Rs 210000
17 Office Decoration,AC,UPS 120000 - Rs 120000
18 Water filling Station 5000 - Rs 5000
19 Polishing& furniture Machine Rs 200000
20 Plumber Tools, Electric tools Rs 10000
Total 930500
*The details of each cost areas under in term of points.

** Our Total investment in the Project is 1230500

Sazghar Rikhaw;
Our major cost is to bought Van upon which we deliver service to our customer. the price
of carry dabba on cash is Rs 350000 (270000+8000 number plate) .if we get this on
finance lease the cost
We have to pay per 50000 Rs on five year with 8 %
Markup and 20% down payment with the installment of Rs5000
Per month.from non banking company on easy terms and conditions,
Initially we bought two carry for our mission success.
 Generator;
Generator is also the major helping items so, we have to buy two generator for our
business one for Lahore. Our requirement is at
least 3KV generator Rs50000 if we buy on credit
it would cost for RS70000 with 20% advance.

Pressure Pump;

Pressure pump cost for Rs15000 and and low pressure motor is also used as backup it
cost is Rs 11500.so we acquire both motor on is used as
backup.

Air Pressure;

Air blower is used for cleaning purpose it cost for RS5500 and power is 800 Watt.

Vacuum Cleaner;
Vacuum cleaner is also a important for cleaning purpose at home or office.Its cost for Rs 12000.

Ladder;
One ladder is also required used as cleaning fan Ac etc .Rs 5500

Water Tank ;
One Water tank of 150Liter is required if customer does not really on dry wash then we have
also a facility of water wash.Rs4500.
Lighting Equipment .

For emergency we also have lighting rod cost for Rs 3500.also extension 2 piece wire included
in it.with 100 meter wire length.

Mobile Phones;
Two mobile phones installed in each van to track the location of Van and Customer. Rs 12000
(nokia 2.2).

Tools ;
Tools include shampoo, surf, Grubs ,safety cap ,towel, polish,Wappper, Rs 10000.& also electric
tool kit and plumber fitting tool including heater etc

Motor Bike;

Motor bike of united used for minor taking order or other related regular purpose but we
purchase it from local shop on installment for Rs 80000 with advance payment of Rs 11250.

Staff Salary;

We hire 5 staff member one driver plus helper two cleaning worker one male and one female and
and one electrician and also plumber who can deal with both one female for reception at
headoffice whose take online order either by Phone or by application.

Web Page;

We develop web page along with google app and android application.To make it easily
assessable for customer through Facebook Whatsapp or by another means.

Marketing expenditure;
200000 lakh is designated for marketing including house survey Boucher and another etc.

Polishing And Furniture cleaning Machine;

We hire advance tools for polishing the tile or Marble and furniture cleaning machine. Whose
cost for Rs 200000.

On Historical basis the by gathering from industry analysis data we have find the growth rate
from such formula;
Latest dividend 1/n
g = [--------------------] -1
Earliest dividend

Now we have gather data from Kamkaj .Lahore Jenitoril and then I find the rate on the discussion based from daily earning. the rate is 41%
growth

Schedule of Projection Inflow month wise as our competitor Discussion;

Year 1 Per Day Earned * No of day worked + Elecric &Plumber earn Amount

Month 1 June 800*25 29900+ 29900 59800

Month 2 July 800*25 29900+ 29900 59800

Month 3 August 800*25 29900+ 29900 59800

Month 4 Sep 800*25 29900+ 29900 59800

Month 5 Oct 800*25 29900+ 29900 59800

Month 6 Nov 800*25 29900+ 29900 59800

Month 7 Dec 800*25 29900+ 29900 59800

Month 8 Jan 800*25 29900 29900 59800

Month 9 Feb 800*25 29900+ 29900 59800

Month 10 March 800*25 29900+ 29900 59800

Month 11 April 800*25 29900+ 29900 59800

 Month 12 May 800*25 29900+ 29900 59800

Total earned in year 1 717600

By calculating growth rate 39%

Total earned in year 2 997464

Total earned in year 3 1386475

Total earned in year 4 1927200

Total earned in year 5 2678808

Schedule of outflow projection.(w2)

Year1 Year 2 Year3 Year4 Year5

Rent 18000 19800 21600 23400 25200
rikshaw Installment 5000 5000 5000 5000 5000

Salary 20000 20% 22000 24000 26000 28000

Water Filling Cost 500 500 500 500 500
Petrol and Electricity per Month 8000 20% 9600 11520 13824 16589
Marketing Expenditure 15000 15% 17250 19838 22813 26235
Miscellaneous expense 5000 10% 5500 6000 6500 7000
(Total Outflow per month *12) 858000 955800 1061496 1176444 1302288

Net Cash Flow

WACC(Weighted Average Cost of Capital).

Total investment in the Project is 1230500 upon which we borrow 280000 from local financial
institution and the remaining is our own equity Rs 950500.so our cost of Debt is 8% and equity
cost 7.06% Mezan Bank.29% tax rate
Calculation of WACC we have following formula;

Ve Vd
WACC = Ke [--------------] + [---------------] Kd (1-T)
Ve +Vd Ve+Vd

950500 280000
7.06[--------------------------] + [-------------------------] 8 (1+0.29)
950500+280000 950500+280000

Our WACC is 6.7%

Now the for NPV (Net present Value)

Particular Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

Initial Investment (930500)
Inflows;
Cash inflows 717600 997464 1386475 1927200 2678808
Outflows;
Cash outflows(w2) (858000) (955800) (1061496 (1176444) (1302288)
)
Cash flows before (140400) 41664 324979 750756 1376520
Tax 29% 40716 (12083) (94244) (217719) (399191)

Net Cash Flow (930500) (99684) 29581 230735 533037 977329

WACC 6.7% 1.00 0.937 0.878 0.823 0.772 0.723

(930500) (93404) 25972 189895 411505 706609

(930500) (99684) 29581 230735 533037 977329

15%
1.00 0.870 0.756 0.658 0.572 0.497

(930500) (86725) 22363 151824 304897 485733

NPV at 6.7%= 310077

NPV 15%= (52408)
Now with the help of this we have to find the internal rate of return;

NPVL
IRR= L + [---------------------(H-L)] X 100
NPVL – NPVH
310077
= 6.7+[---------------------(15 – 6.7)] x 100
310077 – (52408)

BY PUTTING THE VALUE IN THE ABOVE FORMULA OF INTERNAL RATE OF RETURN;

IRR= 13.8%

PAYBACK PERIOD;

YEAR 0 YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

(930500) (99684) 29581 230735 533037 977329

(1030184) (1000603) (769868) (236831) 740498

SO the payback period of the project is 4 year and 3 month it is about to be completed in 5 year
in financial statement….
DISCOUNTED PAYBACK PERIOD;(6.7%)

YEAR 0 YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

(930500) (93404) 25972 189895 411505 706609

(1023904) (997922) (808037) (396532) 310077

Discounted Payback period is 4 year and 7 month approx it is also accounted in 5 year end
financial statement.

CAPITAL INVESTMENT APPRISAL 2

Tunnel forming
In this age of technology, there is a great competition in every field of life. by using technology,
we can produce huge production of vegetables in a small area and also we can save water and
other expenses by using tunnel forming.

In this technique there is very rare chance of the failure. We can save our products from many
environmental effects, produce out seasonal vegetables and earn huge amount.

In my farm I will going to produce tomatoes, cucumber and bitter gourd.

In my working I am increasing the expenses @ 5% each year but I am not increasing my

product price because vegetable rates have much variations. I will take the low price which
I observed in last three years by my own experience.

Initial Investment:
REQUIREMENTS RATE UNTS TOTAL  
STEEL PIPES 800 300 240000 20 years
Drip irrigation system 200000   200000 20 years
GI Wires 140 100 14000 20 years
Labour 20000   20000  
CELLS 200 200 40000 5 years
         
Total   514000  

Working capital for first

AT START & AFTER EACH 2 YEARS

Polythene 220 200 44000 2 years

AT THE START OF EACH YEAR

1 Aiker Rent for one year 45000   45000 10 % INCREASE EACH YEAR

TOTAL COST OF FIRST CROP OF SEASEN

REQUIREMENTS RATE UNTS TOTAL
Land Preparation 10000   10000
NITRO PHARS 2975 2 5950
DAP FERTELIZERS 3245 3 9735
TOMATO PLANTS FOR 1 AIKER 3 5000 15000
Cucumber 2 5000 10000
Labour 10000   10000
Thread 15000   15000
Sprays 10000   10000
PLASTIC BAGS FOR COCUMBERS 400 5 2000
Employ 15000 4 60000
Other exp. 10000   10000
       
  Total   157685

TOTAL COST OF 2ND CROP OF SEASEN

REQUIREMENTS RATE UNTS TOTAL
Land Preparation 10000   10000
NITRO PHARS 2975 2 5950
DAP FERTELIZERS 3245 3 9735
Bitter Gourd 3 8000 24000
Labour 10000   10000
Net 13 1000 13000
Employ 15000 4 60000
Sprays 15000   15000
PLASTIC BAGS 1000 5 5000
Other exp. 20000   20000
       
  Total   172685

Total initial investment

INITIAL INVESTMENT 514000
AT THE START OF EACH YEAR 45000
AT START & AFTER EACH 2 YEARS 44000
TOTAL COST OF FIRST CROP OF SEASEN 157685
TOTAL COST OF 2ND CROP OF SEASEN 172685
OTHER EXPENSES 66630
 TOTAL 1000000
I require Rs. 1,000,000 where equity is 25% and debt require 75% where, cost of equity is
14% and cost of equity is 12%. And tax on agricultural income is completely ZERO.

INFLOWES FOR YEAR 1:

  TOMATOS CUCUMBER BITTER GOURD
Units
(Cells of Rat Units plastic Rat Units plastic
Month 10kg) e TOTAL Bags 40kg e TOTAL Bags 40kg Rate TOTAL
Sep-20 0 0 0 0 0 0 0 0 0
Oct-20 50 500 25000 30 900 27000 0 0 0
Nov-20 80 400 32000 60 900 54000 0 0 0
Dec-20 100 350 35000 80 800 64000 0 0 0
Jan-21 120 250 30000 70 800 56000 0 0 0
Feb-21 80 250 20000 60 800 48000 0 0 0
115
Mar-21 70 250 17500 30 800 24000 20 0 23000
110
Apr-21     0     0 50 0 55000
100
May-21     0     0 150 0 150000
Jun-21     0     0 300 900 270000
Jul-21     0     0 300 900 270000
Aug-21     0     0 100 800 80000
15950 27300
  500   0 330   0 920   848000

Total inflows for 5 years

  year 1 year 2 year 3 year 4 year 5
CUCUMBERS 159500 159500 159500 159500 159500
TOMATOS 273000 273000 273000 273000 273000
BITTER GOURD 848000 848000 848000 848000 848000
TOTAL INFLOWS 1280500 1280500 1280500 1280500 1280500

Outflows for year 1

AT START
REQUIREMENTS RATE UNTS TOTAL
PIPES 800 300 240000 20 years
Drip irrigation system 2E+05 200000 20 years
GI Wires 140 100 14000 20 years
labour 20000 20000
CELLS 200 200 40000

Total 514000
AT START & AFTER EACH 2 YEARS
Polytheen 220 200 44000 2 years
AT THE START OF EACH YEAR
1 aiker Rent for one year 45000 45000 10 % INCREASE EACH YEAR

TOTAL COST OF FIRST CROP OF SEASEN TOTAL COST OF 2ND CROP OF SEASEN
REQUIREMENTS RATE UNTS TOTAL REQUIREMENTS RATE UNTS TOTAL
Land Preparation 10000 10000 Land Preparation 10000 10000
NITRO PHARS 2975 2 5950 NITRO PHARS 2975 2 5950
DAP FERTELIZERS 3245 3 9735 DAP FERTELIZERS 3245 3 9735
TOMATO PLANTS FOR 1 AIKER 3 5000 15000 Bitter Gourd 3 8000 24000
Cucumber 2 5000 10000 Labour 10000 10000
Labour 10000 10000 Net 13 1000 13000
Thread 15000 15000 Employ 15000 4 60000
Sprays 10000 10000 Sprays 15000 15000
PLASTIC BAGS FOR COCUMBERS 400 5 2000 PLASTIC BAGS 1000 5 5000
Employ 15000 4 60000 Other exp. 20000 20000
Other exp. 10000 10000

Total 157685 Total 172685

Outflows for 5 years

  year 1 year 2 year 3 year 4 year 5
AT START OF 1ST YEAR 514000        
AFTER EACH TWO YEARS 44000   48400   53240
AFTER EACH YEARS 45000 47250.0 49612.5 52093.1 54697.8
EXPANCE OF 1ST 2 CROPS 157685 165569.3 173847.7 182540.1 191667.1
EXPANCE OF 2ND CROPS 172685 181319.3 190385.2 199904.5 209899.7
TOTAL OUT FLOWS 933370 394138.5 462245.4 434537.7 509504.6

Net Flows for 5 years

   year 1 year 2 year 3 year 4 year 5
CUCUMBERS 159,500 159,500 159,500 159,500 159,500
TOMATOS 273,000 273,000 273,000 273,000 273,000
BITTER GOURD 848,000 848,000 848,000 848,000 848,000
TOTAL INFLOWS 1,280,500 1,280,500 1,280,500 1,280,500 1,280,500
           
  year 1 year 2 year 3 year 4 year 5
AT START OF 1ST YEAR 514,000        
AFTER EACH TWO YEARS 44,000   48,400   53,240
AFTER EACH YEARS 45,000 47,250 49,613 52,093 54,698
EXPANCE OF 1ST 2 CROPS 157,685 165,569 173,848 182,540 191,667
EXPANCE OF 2ND CROPS 172,685 181,319 190,385 199,904 209,900
TOTAL OUT FLOWS 933,370 394,139 462,245 434,538 509,505
           
Net flows 347,130 886,362 818,255 845,962 770,995

PAY BACK PERIOD

DISCOUNTED PAYBACK PERIOD

YEAR 0 year 1 year 2 year 3 year 4 year 5

Net flows 347,130 886,362 818,255 845,962 770,995

AT 12.5% 0.8889 0.7901 0.7023 0.6243 0.5549

  308,563.86 700314.2212 574660.188 528134.2662 427825.358

           

(1000000) (691436) 8878 583538 1111673 1539498

DISCOUNTED PAYBACK PERIOD @ 12.5 = 2 YEARS

DISCOUNTED NPV @ OF 12.5% = 1539489

SIMPLE PAYBACK PERIOD

YEAR 0 year 1 year 2 year 3 year 4 year 5
 Net flows 347,130 886,362 818,255 845,962 770,995

(1000000) (652870) 233492 1051746 1897708 2668704

SIMPLE PAYBACK PERIOD = 2 YEARS

SIMPLE NPV = 2668708

DISCOUNTED NPV @ OF 25%

YEAR 0 year 1 year 2 year 3 year 4 year 5

Net flows 347,130 886,362 818,255 845,962 770,995

  0.8 0.64 0.512 0.4096 0.3277

  277704 567271.36 418946.342 346506.1596 252655.199

(1000000) (722296) (155025) 263922 610428 863083

DISCOUNTED PAYBACK PERIOD @ 25% = 3 YEARS

DISCOUNTED NPV @ 25% = 863083

IRR
IRR = 40.95%

Analysis of bright cleaning co. & tunnel forming

First of all calculation analysis

Bright cleaning Tunnel forming

Initial investment 930,500 1,000,000
NPV 6.7%= 310077 12.5%= 1539489
Simple payback period 5 years 2 years
Discounted payback period 6.7%= 5 years 12.5%= 2 years
IRR 6.7%= 13.8% 12.5%= 40.94%

Capital investment appraisal 2 is better than capital investment appraisal 2.

1. Calculation analyses you can check from given table.

2. Tunnel forming is really good from bright cleaning company in every all analysis.
3. In bright cleaning company you have 29% tax to pay but tunnel forming tax is totally
exempt because of agricultural income.
4. In bright cleaning company we have growing rat of income in our calculation
5. Butt in tunnel forming we use the lowest rate of last three years because of variation in
the rats of vegetable
6. If the rate increase in any year, we can earn more than the calculation
7. In every way of comparison tunnel forming is better than bright cleaning company.