Wondwosen Alemu Apartment Study FS

LED LAMP PRODUCTION FESIABLITY STUDY
LC
Page 1
FEASIBILITY STUDY FOR REAL ESTATE APARTMENT 2019
TABLE OF CONTENT
1. EXECUTIVE SUMMARY-----------------------------------------------------------------------------------------------7
2. PROJECT BACKGROUND--------------------------------------------------------------------------------------------9
2.1 PROMOTER’S PROFILE--------------------------------------------------------------------------------------------9
2.2 THE PROJECT-------------------------------------------------------------------------------------------------------10
3. MARKET STUDY------------------------------------------------------------------------------------------------------11
3.1 PRODUCT DESCRIPTION----------------------------------------------------------------------------------------11
3.2 APARTMENT DEMAND-------------------------------------------------------------------------------------------11
3.2.1 ECONOMIC GROWTH-------------------------------------------------------------------------------------11
3.2.2 POPULATION GROWTH-----------------------------------------------------------------------------------12
3.2.3 URBANIZATION---------------------------------------------------------------------------------------------13
3.2.4 POPULATION IN ADDIS ABABA-------------------------------------------------------------------------14
3.2.5 ECONOMICALLY ACTIVE POPULATION---------------------------------------------------------------15
3.2.6 FOREIGNERS WORKING IN ETHIOPIA----------------------------------------------------------------16
3.2.7 ETHIOPIANS LIVING ABROAD--------------------------------------------------------------------------18
3.2.8 GOVERNMENT PLAN--------------------------------------------------------------------------------------19
3.2.9 APARTMENT CONSTRUCTION PERMIT---------------------------------------------------------------20
3.2.10 BUILDING HEIGHT LIMIT---------------------------------------------------------------------------------21
3.2.11 TARGET MARKET-------------------------------------------------------------------------------------------23
3.3 MARKETING STRATEGY-----------------------------------------------------------------------------------------23
3.3.1 MARKETING MIX--------------------------------------------------------------------------------------------23
3.4 SWOT ANALYSIS - PROJECT SPECIFIC----------------------------------------------------------------------24
TECHNICAL STUDY------------------------------------------------------------------------------------------------------26
3.5 PROJECT SITE, LAND AND CONSTRUCTION FACILITY-------------------------------------------------26
3.5.1 THE LOCATION OF THE PROJECT----------------------------------------------------------------------26
3.5.2 CONSTRUCTION PERMIT---------------------------------------------------------------------------------26
3.5.3 BUILT UP AREA---------------------------------------------------------------------------------------------26
3.6 FUNCTION AND AMENITIES OF THE APARTMENT-------------------------------------------------------26
3.6.1 COMMON FACILITIES AVAILABLE IN THE BUILDING---------------------------------------------27
3.6.2 BASEMENT---------------------------------------------------------------------------------------------------27
3.6.3 GROUND FLOOR-------------------------------------------------------------------------------------------27
3.6.4 1ST FLOOR----------------------------------------------------------------------------------------------------28
3.6.5 2ND FLOOR UP TO 5TH FLOOR---------------------------------------------------------------------------29
3.6.6 6TH FLOOR----------------------------------------------------------------------------------------------------29
3.7 LAND, BUILDING AND CIVIL WORKS OF THE APARTMENT-------------------------------------------30
3.8 DECORATION, EQUIPMENT AND UTILITY------------------------------------------------------------------30
Page 20
4. PROJECT IMPLEMENTATION--------------------------------------------------------------------------------------32
5. ORGANIZATIONAL & MANAGEMENT--------------------------------------------------------------------------33
5.1 ORGANIZATIONAL STRUCTURE------------------------------------------------------------------------------33
5.2 MANPOWER PLAN------------------------------------------------------------------------------------------------34
5.3 AVAILABILITY OF MANPOWER--------------------------------------------------------------------------------35
5.4 EMPLOYEE BENEFITS--------------------------------------------------------------------------------------------35
5.5 RECRUITING AND TRAINING PLAN--------------------------------------------------------------------------35
6. FINANCIAL ANALYSIS-----------------------------------------------------------------------------------------------36
6.1 INVESTMENT COSTS AND SOURCES OF FINANCE------------------------------------------------------36
6.2 FEASIBILITY ANALYSIS------------------------------------------------------------------------------------------37
6.2.1 INCOME STATEMENT--------------------------------------------------------------------------------------37
6.2.2 PROFITABILITY RATIOS-----------------------------------------------------------------------------------38
6.2.3 BALANCE SHEET-------------------------------------------------------------------------------------------39
6.2.4 CASH FLOW--------------------------------------------------------------------------------------------------39
6.2.5 SENSITIVITY ANLYSIS-------------------------------------------------------------------------------------39
Page 20
TABLE OF FIGURES
FIGURE 1: GDP GROWTH....................................................................................................12

FIGURE 2: POPULATION PROJECTION (IN MILLIONS).................................................13
FIGURE 3: URBAN POPULATION (2015).........................................................................14
FIGURE 4: EXPATRIATE EMPLOYMENT...........................................................................17
FIGURE 5: HOUSING UNIT CONSTRUCTION PLAN......................................................20
FIGURE 7: PROJECT IMPLEMENTATION SCHEDULE......................................................................32
FIGURE 8: ORGANIZATION STRUCTURE.......................................................................................34
Page 20
LIST OF TABLES
TABLE 1: TYPES OF APARTMENTS...................................................................................11

TABLE 2: PROJECTED TREND OF GDP GROWTH.........................................................12
TABLE 3: POPULATION IN ADDIS ABABA.......................................................................14
TABLE 4: TOTAL URBAN POPULATION EMPLOYMENT (2015).................................15
TABLE 5: ECONOMIC ACTIVITY IN ADDIS ABABA (2015).........................................15
TABLE 6: FOREIGNERS EMPLOYMENT IN ETHIOPIA...................................................17
TABLE 7: ETHIOPIAN ASYLUM SEEKERS........................................................................18
TABLE 8: BUILDING PERMIT...............................................................................................21
TABLE 9: BUILDING HEIGHT...............................................................................................21
TABLE 10: COST OF CONSTRUCTION............................................................................................30
TABLE 11: DECORATION, EQUIPMENT AND UTILITY....................................................................30
TABLE 12: HUMAN RESOURCE REQUIREMENT............................................................................34
TABLE 13: TOTAL INITIAL INVESTMENT....................................................................................... 36
TABLE 14: SALES OF APARTMENT BUILDING...............................................................................37
TABLE 15: SUMMARY OF INCOME STATEMENT..........................................................................37
TABLE 16: SENSITIVITY ANALYSIS ON KEY VARIABLES..................................................................39
Page 20
ACRONYMS
ITC – INTERNATIONAL TRADE CENTER
COMESA - COMMON MARKET FOR EASTERN & SOUTHERN AFRICA
WTO – WORLD TRADE ORGANIZATION
MOLSA – MINISTRY OF LABOR AND SOCIAL AFFAIRS
MOFED – MINISTRY OF FINANCE AND ECONOMIC DEVELOPMENT
ERCA – ETHIOPIAN REVENUE AND CUSTOMS AUTHORITY
CSA – CENTRAL STATISTICAL AGENCY
EIA – ETHIOPIAN INVESTMENT AGENCY
GTP – GROWTH AND TRANSFORMATION POLICY
CSA- CENTRAL STATISTICAL AGENCY
Page 20
1. EXECUTIVE SUMMARY
Wondwosen Alemu apartment engaged in the trading sector of the economy now
planned to establish the signature residential and commercial real estate a G+ 6
state of art projectNifas-Silk lafto Sub-city aroundJemo on 500 m2 of land in Addis
Ababa City to address the acute shortage of residential and commercial housing in
Addis Ababa in a systematic and innovative way, focusing on residential housing
with a business strategy of building the highest possible quality buildings by
adapting customer focused approach throughout its development and introducing
new building technologies that will cut costs and save construction time while also
improving quality.
The project will have a combination of one three bed room apartment flat (119m 2)
on the ground floor, one two bed room apartment flat (123M 2) on 1st floor, ten
identical two-bedroom apartment flat (111m 2) from 1st floor, 2nd to 6th floor on the
6th floor. The apartment has additional amenities like game zone, reception,
balcony, basement for parking and sitting area.
Considering the above parameters of the project, the market of apartments has
been analyzed in detail in order to evaluate the viability of the project and to select
the most profitable segment of the market. To strengthen the assessment, major
players in the apartments market around the project area has been selected and
assessed in depth.
The population of Addis Ababahas been increasing with an average annual rate of
2.41% since 1998. Although population growth shows the demand for housing, the
rate of increase in households is believed to provide a direct measure of potential
housing demand.
The demand and supply of housing unit in Ethiopia has be increasing due to small
number of housing unit construction, increasing number of urbanizations,
population growth, in addition to the already accumulated demand for housing units
which is estimated about 400,000 unit
Page 20
To contribute its share in meeting the demand for housing units as part of its
strategic planning, Wondwosen Alemu apartment will use both local and foreign
construction experts in various spectrum of the real estate development.
The project will bring many socio-economic benefits. Among which are poverty
alleviation, tax revenue, minimizing foreign currency expenditure and will have an
overall ripple effect on the overall economy. During the construction of the site the
company will hire 10 permanent employees and 100 temporary workers from the
surrounding community.
Total investment required for the project is estimated to be Birr 61,077,272

investment. The cost covers initial fixed investment costs of Birr 51,306,760,
working capital requirements and pre-operating expenses of Birr 9,770,512.
The sources of finance for the total investment will be equity capital and long-term
loan obtained from Abay Bank loan. Of the total investment, Birr 41,315,385 (69%)
expected to be financed by the Banks where the promoters will invest the
remaining half Birr 18,381,280 (31%) of the investment.
The projection for the income statement is primarily derived from apartments sales
estimates which is based on an adequate market assessment and guaranteed sales
from previous experiences. The two bed room apartment flats of 123 M2 will be
sold at Birr 13.6 million and three bed room apartment flats of 119.05 will be sold at
birr 6.5 million.
After project implementation the company is expected to generate sales of Birr

77,247,500 in the first year of operation and that will increase to Birr 160,180,416
at the end of the fifth year. The cost of sales estimated to be Birr 56,641,148
expected to reach Birr 114,123,442. The company expected to generate a net profit
of Birr 9,363,312 in the first year of operation and that will increase to Birr
32,239,882 at the end of the fifth year.
Net Capital of the company will grow from Birr 18,381,280 in the first year to Birr
65,638,752 during fifth year of operation. The IRR (Internal Rate of Return) of the
project for total investment is found to be 29% with the above economic rate of
return, the project is found economically viable and attractive for investment.
Page 20
2. PROJECT BACKGROUND
2.1 PROMOTER’S PROFILE

Wondwosen Alemuis promoted, Ato Wondowosen Alemu Tadesse who is
professionals and well experienced in managing successful business both locally
and abroad. Ato Wondwosen Alemu was engaged in import and export business in
South Africa during the period 2002-2010. After returning to Ethiopia the
entrepreneur has invested in various sectors of the economy including the
following;
 Founder and owner of C & E Brothers Steel Factory PLC

 Owner of Wondwosen Alemu apartment
 Owner of MWA General Trading Plc
 Owner of MWA Hitec Plastic Industry plc
2.2 THE PROJECT

As part of Wondwosen Alemu apartment ’s expansion strategy, the company
planned to develop a residential and commercial real-estate project. The signature
residential and commercial real estate project is a G+6 state of art project around
Jemo 500 m2 of land in Addis Ababa City.
 THE PROJECT
The project will have a combination of;
 One three bed room apartment flat (119m2) on the ground floor,
 Nine identical two-bedroom apartment flat (111m 2) from 2nd to 6th floor and
 Amenities like game zone, reception, balcony, basement for parking and
sitting area.
Page 20
 Basement floor: parking space for 10 cars
 Ground floor: amities and one three bed room apartment (119 m 2) flat
 1st floor: two non-identical two bed room apartment flat

o Two bed room apartments flat (115 m2)
o Two bed room apartments flat (123 m2)
 2nd floor to 6th floor: eight identical two bed room apartment flats (115m 2)
Page 20
3. MARKET STUDY
3.1 PRODUCT DESCRIPTION
According to the market survey on real-estate market and the need of potential
buyer Wondwosen Alemu has to build a good finish apartment building with all
safety and amenities are in place. The envisaged with their respective size is shown
in the table below.
TABLE 1: TYPES OF APARTMENTS
Apartment type Size (M2) PCS

Three bed rooms Ground floor 119.05 1
apartment
Two bed rooms 1st floor 123.65 2
apartment
Two bed rooms 1stfloor and 2ndto 6thfloor 115.35 9
apartment
Total 12
3.2 APARTMENT DEMAND
The demand for apartment mainly driven by accumulated housing unit demand,
urbanization, population growth, inflow of tourist for different purposes, particularly
those related to research, and foreigners working in Ethiopia, upper and middle tier
management staffs in financial and other institutions, etc.
The main derivers of the apartment are discussed as follows:
3.2.1 ECONOMIC GROWTH
Ethiopian economy has registered a stride in economic and social development, and
robust economic growth averaging more than 10% since 2001/02. According to IMF,
report 2015, following the dramatic decline in the incidence of poverty over the last
decade, nonmonetary dimensions of well-being have also improved, including in the
rural areas. Based on the Human Development Index (HDI), Ethiopia has been
successful in translating economic growth into higher living standards for the
citizens and has outperformed many sub-Saharan African countries and a number of
non-African countries (indicated by Ethiopia’s higher actual HDI than that predicted
Page 20
by a cross-country correlation between the HDI and per capita gross national
income.
The agriculture, industry, manufacturing and service sectors’ annual average

growth was 9.6%, 22.2%, 19.2% and 9.6 % in 2014/15, and it is projected to attain
8%., 19.8%, 23.9% and 10.1% within the next five years, respectively, as indicated
in the GTP II. On the plan, the Ethiopian economy is also estimated to grow by 11%
for the next five years, as shown in the table below.
TABLE 2: PROJECTED TREND OF GDP GROWTH
Average Average
performance Baseline projection
Sector
(2009/10 - (2014/15) (2015/16 -
2013/14) 2019/20)
Agriculture and allied
6.6 9.6 8.0
activities
Industry 20.0 22.2 19.8
Manufacturing 13.0 19.2 23.9
Service 10.7 9.4 10.1
GDP 10.1 11.4 11.0
SOURCE: GTP II
IMF projection of Ethiopian GDP growth is conservative than GTP II projection.

According to IMF 2017 report, the economy projected to grow consistently for the
next three years with an average growth rate of 7.5 % as shown below.
FIGURE 1: GDP GROWTH
GDP growth
10.3% 10.4%
9.9%
8.0%
7.5% 7.5% 7.5% 7.4% 7.3% 7.3%
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
SOURCE: IMF, 2015
Page 20
3.2.2 POPULATION GROWTH
Population increase widens the customer base for housing unit in the local market.
According to CSA, Ethiopian population grew at an average annual rate of 2.6
percent and projected to reach 100 million within the next five years from 84.3
million in 2011. The following figure shows the population projection for the next
five years.
FIGURE 2: POPULATION PROJECTION (IN MILLIONS)
Chart Title
2018
2017
2016
2015
2014
2013
2012
2011
77.50 82.50 87.50 92.50 97.50 102.50
2011 2012 2013 2014 2015 2016 2017 2018
Series1 84.3 86.4918 88.74058 91.04784 93.41508 95.84387 98.33581 100.8925
68 20568 5950276 8184983 9017793 5031225
8 9 5 6
SOURCE: CSA
The increase in population is estimated to increase the demand for housing units.
Hence, the demand for housing units
3.2.3 URBANIZATION
As urbanization indicates people’s living style, it is a major factor to derive a

demand for apartment. Most urban population is assumed to travel from place to
place for religious ceremonies, recreation, for a higher demand of different types of
accommodation, goods and services. High concentrations of people and economic
activity in urban areas are often associated with high level of accommodation.
In Ethiopia, Urban population growth rate is projected to increase by 4% annually.

Hence, the demand for housing unit estimated to increase with similar rate. By the
Page 20
end of the 2015, the total urban population estimated about 17.5 million as shown
below.
Page 20
FIGURE 3: URBAN POPULATION (2015)
17,459,000
8,689,000 8,770,000
Male Female Total

SOURCE: CSA PROJECTION (2014-17)
From the total Ethiopian, Urban Population, Addis Ababa holds around 19% of the
urban population followed by Gondar and Mekelle with 2% share as shown in the
figure below.
3.2.4 POPULATION IN ADDIS ABABA
According to CSA, in 2017 Addis Ababa has estimated population of 3.4 million in
2017. Of which, Kolfe Keranyo has a largest population followed by Yeka and Nefas
Silk Sub city with 16%, 13% and 12% share. Lideta sub city has 7% share a little
more than Akaki Kality sub city.
TABLE 3: POPULATION IN ADDIS ABABA

Sub city 2015 2016 2017 % share
Kolfe Keranyo 512,369 524,719 537,561 16%
Yeka 414,212 424,217 434,599 13%
Nefas Silk - Lafto 377,892 387,071 396,486 12%
Bole 369,189 378,104 387,355 11%
Gullele 319,712 327,426 335,434 10%
Addis Ketema 305,058 312,414 320,053 9%
Kirkos 264,337 270,721 277,346 8%
Arada 252,705 258,808 265,141 8%
Lideta 240,989 246,805 252,842 7%
Akaki Kalit 216,538 221,759 227,182 7%
Total 3,273,001 3,352,044 3,433,999
Page 20
3.2.5 ECONOMICALLY ACTIVE POPULATION
In addition to the above-mentioned derivers of apartment, the size and growth of

economically active population in the target market location and its surrounding has
a significant impact in increasing the demand for apartment.
In Ethiopia, out of the total population, 13.4 million populations are estimated to be
urban population, of which, 8.5 million populations are economically active, which
are engaged in different types of economic activity (self-employed or employed in
some sort of employment) as shown in the following table.
TABLE 4: TOTAL URBAN POPULATION EMPLOYMENT (2015)

Economically active
All urban
Total Not activity
populatio
employe unemploye
economically active rate
n d d
active
13,381,37 7,083,09
Total 1,434,227 8,517,320 4,864,055 64%
5 3
3,963,14
Male 6,223,736 462,220 4,425,363 1,798,373 71%
3
3,119,95
Female 7,157,639 972,007 4,091,957 3,065,682 57%
0
SOURCE: URBAN EMPLOYMENT SURVEY_2015
In Addis Ababa, 2.84 million people is above age 10, of which 61% of the population
is economically active (about 1.7 million people).
TABLE 5: ECONOMIC ACTIVITY IN ADDIS ABABA (2015)

Economically No Total %
active active
Total 1,728,296 1,116,09 2,844,395 0.61
9
Male 902,490 387,430 1,289,920 0.70
Female 825,806 728,670 1,554,476 0.53
10-14 17,786 271,040 288,826 0.06
Male 7,733 124,839 132,572 0.06
Female 10,053 146,201 156,254 0.06
15-19 111,430 246,763 358,193 0.31
Male 30,002 106,562 136,564 0.22
Female 81,428 140,201 221,629 0.37
20-24 283,947 126,360 410,307 0.69
Male 128,729 41,610 170,339 0.76
Female 155,218 84,750 239,968 0.65
25-29 353,807 69,861 423,668 0.84
Male 181,270 14,600 195,870 0.93
Female 172,537 55,261 227,798 0.76
30-34 280,552 46,647 327,199 0.86
Male 153,982 8,363 162,345 0.95
Page 20
Economically No Total %
active active
Female 126,570 38,284 164,854 0.77
35-39 246,248 38,040 284,288 0.87
Male 136,113 4,203 140,316 0.97
Female 110,135 33,837 143,972 0.76
40-44 138,833 21,766 160,599 0.86
Male 80,932 4,190 85,122 0.95
Female 57,901 17,576 75,477 0.77
45-49 94,830 27,470 122,300 0.78
Male 55,954 4,174 60,128 0.93
Female 38,876 23,296 62,172 0.63
50-54 68,221 40,104 108,325 0.63
Male 40,358 5,085 45,443 0.89
Female 27,863 35,019 62,882 0.44
55-59 59,177 32,938 92,115 0.64
Male 32,299 4,765 37,064 0.87
Female 26,878 28,173 55,051 0.49
60-64 29,680 52,386 82,066 0.36
Male 21,829 11,914 33,743 0.65
Female 7,851 40,472 48,323 0.16
65+ 43,785 142,724 186,509 0.23
Male 33,288 57,124 90,412 0.37
Female 10,497 85,600 96,097 0.11
SOURCE: URBAN EMPLOYMENT SURVEY_2015
The increase in economically active population across many sectors in urban

Ethiopia estimated to increase the demand for housing unit. This growth in
economically active population is estimated to increase for the foreseeable future in
Ethiopia, according to World Bank projections.
3.2.6 FOREIGNERS WORKING IN ETHIOPIA
In addition to the local demand for apartment units’ foreigners living and working in
Ethiopia indirectly drive the demand via the need to get rental house unit, in case of
Kazanchis apartment units. Most apartment units in front of ECA is occupied by
foreigners who are living and working in Ethiopia for different purposes. According
to Ethiopian labor law no. 377/2003, any foreign national can be employed in
Ethiopian provided that he/she has work permit that is issued by competent
authority such as Ethiopian Investment Agency. A work permit is given for three
years. Expatriates employed in Ethiopia have been steady increase with in the last
six years with growth rate of 233% within the last six years. The trend of expatriate
employment is shown in the chart below.
Page 20
FIGURE 4: EXPATRIATE EMPLOYMENT
20,689.00
14,918.00 15,238.00
12,864.00
8,400.00
6,208.00
2010/11 2011/12 2012/13 2013/14 2014/15 2015/16

SOURCE: MOLSA
Foreigners mainly employed in Ethiopia in the construction section (about 55% in

2016), followed by community, manufacturing, social and personnel industries. The
last six years’ foreign employment statistical data is shown in the table below.
TABLE 6: FOREIGNERS EMPLOYMENT IN ETHIOPIA

Description 2010/1 2011/1 2012/1 2013/1 2014/1 2015/1
1 2 3 4 5 6
Agriculture, Hunting, Forestry 1056 1986 663 375 456.00 383
and Fishing
Community, Social & Personnel 3154 3605 160 193 1,350.0 2032
0
Construction 593 1162 3245 4139 6,588.0 11428
0
Electricity, Gas & Water 15 57 762 1429 2,475.0 1124
0
Finance, Insurance and 166 76 5730 5707 193.00 535
Business S
Manufacturing 18 2 145 305 3,294.0 3460
0
Mining& Quarrying 853 1204 418 409 233.00 752
Transport, Storage & 326 274 106 161 402.00 747
Communication
Wholesales& Retail 27 34 1635 2200 247.00 228
Total 6,208 8,400 12,864 14,918 15,238 20689
SOURCE: MOLSA
As discussed above the number of foreigners employed in Ethiopia has been

increasing and it is estimated to increase in the future. Hence, the demand for
Page 20
apartment estimated to increase for the foreseeable future due to accommodation

need of expatriates.
3.2.7 ETHIOPIANS LIVING ABROAD
The number of Ethiopians living abroad is not known. According to MFA, it is

estimated between 590,000 and 3 million. According to OECD report, yearly on
average more than 4000 people are going to different countries, mainly to USA,
Sweden,Germany, etc as shown in the table below
TABLE 7: ETHIOPIAN ASYLUM SEEKERS

200 200 200 200 201 201 201 201 201 201
Year
6 7 8 9 0 1 2 3 4 5
Country
Australia 26 32 43 20 37 33 43 76 54 56
Austria 21 10 20 12 15 13 16 20 8 0
Belgium 68 80 71 89 53 32 33 16 30 47
Canada 234 158 197 178 145 187 246 138 160 286
Czech 2 2 0 0 1 2 1 1 0 0
Republic
Denmark 8 3 5 6 14 4 13 22 102 57
Finland 20 18 14 26 10 28 13 23 18 65
France 66 48 41 99 93 87 122 117 209 483
Germany 176 167 183 220 289 430 481 717 117 213
4 5
Greece 170 102 118 171 50 65 181 105 47 28
Hungary 6 8 3 8 3 1 2 5 0 38
Iceland 0 0 0 1 1 4 0 0 0 0
Ireland 30 20 11 15 14 11 3 9 0 0
Israel 13 45 495 16 148 94 .. .. .. ..
Italy 453 399 330 65 29 219 101 295 93 87
Japan 14 29 51 15 18 11 17 20 10 0
Korea 21 4 6 1 6 6 15 68 6 15
Latvia .. .. .. .. .. .. 0 0 0 0
Luxembourg 4 3 2 3 6 6 5 4 0 0
Mexico 66 11 1 1 1 0 .. .. .. ..
Netherlands 209 42 47 86 76 81 71 90 79 133
New Zealand 0 2 2 4 3 1 6 1 0 0
Norway 143 241 354 706 505 293 221 356 365 662
Poland 1 3 0 1 1 0 0 0 0 0
Portugal 1 1 1 0 0 5 1 0 0 0
Slovak 0 0 0 0 0 0 0 1 0 0
Republic
Slovenia 0 0 0 0 0 0 0 0 0 0
Spain 20 11 16 21 10 6 40 8 0 0
Sweden 83 113 127 192 194 269 339 383 467 160
2
Switzerland 255 245 231 183 142 184 293 221 312 565
Turkey 58 54 17 23 39 29 51 100 103 47
Page 20
200 200 200 200 201 201 201 201 201 201
Year
6 7 8 9 0 1 2 3 4 5
United 215 90 150 110 105 118 145 172 267 769
Kingdom
United States 116 112 116 124 119 106 114 149 145 141
8 4 8 9 3 6 5 3 6 6
355 306 370 352 320 328 360 446 496 849
1 5 4 1 1 5 4 1 0 1
SOURCE: OECD REPORT
According to the National Bank of Ethiopia (NBE), remittance flow to Ethiopia

reached USD 3 billion from 2010 amount of USD 1.9 billion have increased from
USD 1.9 billion in 2010 to USD 3 billion in 2014, remittance contribution represents
about 5.3 % of the country’s GDP between 2010 and 2014.
Remittance transferred to the country is to meet various objective of the diaspora

community mainly to buy assets and to support family.
3.2.8 GOVERNMENT PLAN
Ethiopia is a developing country with inadequate supply of housing and one of the
lowest proportions of citizens living in urban areas. In Ethiopian, mainly in Addis
Ababa, the real estate sector boomed following a proclamation issued in November
2002. Prior to the proclamation which provides incentives for developers, the
number of real estate companies engaged in the development where not more than
five, the biggest being Ayat Real-estate and Berta Real Estate.
Shortly after the proclamation the Ethiopian government lunched low cost
development housing program in 2004. A low-cost condominium house remains the
main source of supply in the country so far. Most are built both in the center of
cities or in peripheral areas at low cost. However, the housing supply mainly
emanates from four sources:
 housing development by associations or individuals

 Low cost houses and 40/60 housing project sponsored primarily by
Government
 Houses built by real estate developers
 Private developments
Even though, the contribution of other sources has increased during the last
decade, the government took the line share by constructing 214,000 housing units,
which is about 53.5 % of the plan to build between 2010 and 2015.
Page 20
According to GTP II, about 750,000 units planned to be constructed with in the next
five years (between 2015/16 and 2019/20), via various sources, mainly by
government and cooperatives, as indicated in the chart below.
FIGURE 5: HOUSING UNIT CONSTRUCTION PLAN
3.3
HOUSING UNIT CONSTRUCION PLAN
160
140 Number of houses constructed by

government(thousand)
120 Number of houses constructed by
cooperatives(thousand)
100 Nuhmber of houses constructe by
private sector(thousand)
Number of houses constructed by
80 Realestate developers(thousand)
Number of houses constructed by
60 government & privates
sectors(thousand)
40 Total housing unit
20
0
2015/16 2016/17 2017/18 2018/19 2019/20
3.2.9 APARTMENT CONSTRUCTION PERMIT
Addis Ababa Administration has issued more than 1049 construction permits with in
the last three years for mixed use, apartment, office apartment, etc.The license
mainly given to various types of mixed use building, followed by apartment and
real-estate developments.
Page 20
TABLE 8: BUILDING PERMIT
No of building
Grand Total 1049
Various mixed use build. 818
Realestate
20
Shop/Office Apartment
2 No of building
Residential
11
apartment/shops
1
Residential and business
1
apartment 196
0 200 400 600 800 1000 1200
3.2.10 BUILDING HEIGHT LIMIT

Addis Ababa city has a minimum and maximum building limitation according to
their respective building height zone as shown in the table below. Around the
project site the minimum building height limit is 8 floor and the maximum limitation
is 13 floors.
TABLE 9: BUILDING HEIGHT

N
Location Old building height New building height
o
1 Center of the city
Inner Zone G+7 based on LDP lower - upper
34 52
Intermediate Zone lower - upper
21 34
Outer Ring lower - upper
13 21
2 Around Mercato G+2 based on LDP lower - upper
1 5
3 Around Pissa G+2 based on LDP lower - upper
1 5
4 Around megenagna G+20 based on LDP lower - upper
13 21
5 Around Kaliti -------- lower - upper
8 13
6 Around Lebu -------- lower - upper
8 13
7 Around Bistrate Gabriel G+2 based on LDP lower - upper
13 21
8 Around Meri Lokie G+2 based on LDP lower - upper
8 13
9 Around Gottera G+2 /4 based on LDP lower - upper
13 21
10 Around Saris -------- lower - upper
8 13
11 Around Kotari G+2 based on LDP lower - upper
8 13
12 Around Betehel -------- lower - upper
8 13
Page 20
N
Location Old building height New building height
o
13 Around Winget G+4 based on LDP lower - upper
8 13
14 Around Edenamall G+4-12 based on LDP lower - upper
5 10
15 Around Torhailoch G=4based on LDP lower - upper
8 13
16 Around Tafo -------- lower - upper
3 5
17 Around Ayat -------- lower - upper
5 8
18 Around Bole Yeka G+2 based on LDP lower - upper
5 8
19 Around Karalo -------- lower - upper
5 8
20 Around Kotebe College G+4-12 lower - upper
8 13
21 Around Gerji G+2-7 lower - upper
5 8
22 Around Bole Michael G+4-12 lower - upper
5 8
23 Around 22 Mazoria G+4-12 lower - upper
8 13
24 Around Shero meda -------- lower - upper
5 8
25 Around Addisu Gebeya G+4-12 lower - upper
8 13
26 Around 18 Mazoria G+2-7 lower - upper
5 8
27 Around Keranio Medhinalem -------- lower - upper
5 8
28 Around Alem Bank -------- lower - upper
5 8
29 Around Karakorie -------- lower - upper
5 8
30 Around Lafto/lebu G+2-7 lower - upper
5 8
31 Around Jemo G+2-7 lower - upper
5 8
32 Around Mekanisa G+4-12 lower - upper
8 13
33 Around Gofa/kera G+4-12 lower - upper
8 13
34 Around Tuledemtu -------- lower - upper
5 8
35 Around Akaki G+2-7 lower - upper
3 5
3.2.11 TARGET MARKET
 In Addis Ababa there are hundreds of embassies, several hundred NGOs, aid
agencies, major international institutions like AU, UNECA and others with a
demand for residential houses, which is close to the city center for various
reasons, such as short driving distance, ease of transportation access, short
distance to shopping malls and supermarkets, etc.
Page 20
 The expatriate community is a major contributor for the demand of furnished

apartment in the center of the city. Potential ETAA development apartment
buyer could easily convert the house to furnished apartment to seek for higher
rent. The location is ideal for such business activity.
 Ethiopian diaspora is a major buyer of property in Addis Ababa. Currently, the

major consideration in the table is mainly reliability of the real-estate company
in addition to product quality, location, delivery period and price. ETAA fulfill all
of these requirements. Hence, the company expected to attract a significant
portion of Ethiopian diaspora market.
 Working professionals: mainly Bank, Insurance and other financial industry

employees’ salary has increased with in the last five years. Their salary
increases and loan facility availed by the Banks makes them a potential buyer of
the houses.
3.4 MARKETING STRATEGY
3.4.1 MARKETING MIX

Based on the market analysis above, the marketing mix of this project is well
thought out and in line with the current demand in Addis Ababa. Hence, the
marketing decisions that affect the level of demand by the target audience – include
service, location promotion and price.
i. Product/Service: high quality apartments and facilities accompanied by

exemplary personal service, differentiated from competition quality with the
overall brand strategy has proven to be a successful approach generating high
levels of sales.
The project will have excellent staffing with well-structured and dedicated
teams at all levels and an exceptional proactive service and customer care.
Project is structured to provide high level customer service.
ii. Place: The apartments have a prime location. The sales team base to sale the
unit will be in ETAAoffice, Product and service information are sold to the clients
via personal selling, direct marketing, advertising and the Internet., etc
Page 20
iii. Promotion: Promotion refers to the methods used to communicate to the

target market about the existence of the product/service. The primary focus of
the project promotion will be mass communication via TV and radio programs,
print ads in trade publications, business reviews and on the Internet. Various
types of promotional packages will be prepared to attract the young generation.
Personal selling will remain an important element of the mix in order to

continue to build personal relationships with clients.
Public relations activities are also considered to play an important role in the
marketing mix, presenting the ETAAdevelopment as a supportive member of
the community and participating in significant local events.
iv. Pricing: The Pricing strategy will be consistent with the objective of the project,
to provide benefit for a reasonable rate as opposed to discounting and de
valuing our products and services.
3.5 SWOT ANALYSIS - PROJECT SPECIFIC
STRENGTH
 The apartment is located on prime location for traveler, business people,

expats, etc. to execute their business in the city.
 The apartment will have all the features of a modern building that will attract
more buyers.
 The apartment will have sufficient parking space that will attract more
buyers.
WEAKNESS
 The project planned to minimize its weakness.

 To overcome weakness of the industry specially those related with
marketing, the company will utilize its own marketing system to reach the
market.
OPPORTUNITY
 Increasing number of new business establishment

 Most buildings located on bole area, those particularly in the project area
have limited or no parking area, the project on commencement of
Page 20
operation will have sufficient parking area that will attract more buyers in
the market.
THREATS
 Global economic environment was weak due to the financial crises in

2007/8. However, it has shown a significant improvement in recent years.
 The project will work on various marketing and advertisement techniques
the market.
Page 20
TECHNICAL STUDY
3.6 PROJECT SITE, LAND AND CONSTRUCTION FACILITY
3.6.1 THE LOCATION OF THE PROJECT

The project is located in Nifas-Silk lafto Sub-city around Jemo in Addis Ababa City.
The total area of the project is about 500m 2, about 70% of the parcel envisaged to
be used for the construction of the apartment. The location of the project currently
mainly occupied by residential areas with in a near distance to the main road.
3.6.2 CONSTRUCTION PERMIT

The land is allocated for the development of high density mixed residence as
indicated on the lease hold title certificate. High density mixed use construction
permit allows the development to be apartments.
3.6.3 BUILT UP AREA

The envisaged project assumed to have about 350m 2built-up area. The rest can be
used for parking and other purposes.
3.7 FUNCTION AND AMENITIES OF THE APARTMENT
The envisaged apartment assumed to have all the amenities of a real-estate

apartment. The apartments will have basement for parking purposes, the ground
floor will be for reception, game zone, bed room for guards and toilet and one three
bed room apartment flat. Starting from first floor the building is planned to be
occupied by apartment of different sizes.
The project location is ideal for residential apartment due to its proximity to the
airport and many international and governmental offices.
The apartments provide far more space than a typical flat. The project assumed to
have a combination of two and three bed rooms, and it is designed to have options.
The furnished apartment will have the following features.
Page 20
 Contemporary architecture
 Quality, kitchen cabinet and closet furniture
 Sufficient Parking space
The types of apartment located in each floor is discussed as follow
3.7.1 COMMON FACILITIES AVAILABLE IN THE BUILDING

Garbage shooting facility: Dry trashes from the apartment directly shoot to the
garbage bin.
Elevators:Elevator assumed to be functional in the building for the public use.
Common service area:Game zone, Sitting area, Balcony for recreational activities
at the ground floor of the building with toilet, etc
Central Security system:The gate & outside of the building will be covered by
security camera system. The cameras will be located to cover all activities in the
public area.
Central AV system: The arrangement of the AV system will consider the purpose
of each floor.
Access to disabled people: The building will be easily accessed by disabled

people easily.
3.7.2 BASEMENT
Inconsideration of a space requirement of the planned function of the

development, sufficient parking space will be available for home owners.
Basement of the building is about 288m2 which is used for parking with 10 parking
spaces holding capacity.
3.7.3 GROUND FLOOR

The ground floor will have space that will be used for communal amenities like
reception, sitting area, guard bed room, toilet, game zone, balcony and one three
bed room apartment flat (119M2). The restaurant will have the following amenities.
Page 20
space(m2)
Administrative office 8.35
Sitting area 14.13
Corridor 18
Guard Room 8.16
Amenities
Toilet 6.31
Balcony 8.75
Reception 26.63
Total 90.33
Three bed rooms apartment
Lobby 4.38
Living Room 17.52
Dining & Kitchen 16.48
corridor 6.82
1st bed room 12.02
1 rooms/floor 2nd bed room 12.02
Guest toilet 6.83
Store & laundry room 5.63
Master bed room 20.9
Master bath room 5.67
Balcony 10.78
Total 119.05
3.7.4 1stFLOOR
The 1st floor of the building will have two non-identical two bed room flats. The flats
will be 115 M2 and 123M2 size will have two bed rooms with two baths.
space(m2)
2 rooms/floor Two bed rooms apartment
Living Room 25.35
Balcony 1 6.62
corridor 7.94
Guest bed room 15.48
Guest hand wash dash 2.73
Guest bath room 4.27
Walk in closet 5.4
Balcony 2 3.81
Total 115.35
Two bed rooms apartment
Living Room 25.35
Store 1 3.6
Balcony 1 6.62
corridor 7.94
Page 20
space(m2)
Store & laundry room 2 4.49
Walk in closet 5.4
Balcony 2 3.81
Total 123.65
3.7.5 2ND FLOOR UP TO 5TH FLOOR

Each floor will have two apartments with two 2 bed rooms with 115 M 2 size. The
features of the apartments shown below.
Two bed rooms apartment space(m2)

Living Room 25.35
Balcony 1 6.62
corridor 7.94
2 rooms/floor
Store &laundry room 4.49
Walk in closet 5.4
Balcony 2 3.81
Total 115.35
3.7.6 6THFLOOR
On the 6th floor the building with about 196m 2 floor space laying on the two floors
with internal stairs. The features of the apartment are shown below.
Two bed rooms Apartment space(m2)

Living Room 25.35
Balcony 1 6.62
corridor 7.94
2 rooms/floor Guest toilet 2.73
Walk in closet 5.4
Balcony 2 3.81
Total 111.08
Page 20
3.8 LAND, BUILDING AND CIVIL WORKS OF THE APARTMENT

The envisaged real-estate apartment building consists of communal amenities in
the ground floor andtwo and three bed room apartment. The building will have a
built-up area of 2,540m2. To complete the building Birr 40.2 million will berequired.
The following table shows the detail of the construction cost.
TABLE 10: COST OF CONSTRUCTION
Built Up
Description Unit cost/M2 Total Cost ETB
area (M2)
Cost of Building construction 2,540 15,848 40,254,000
Total 40,254,000
Currently, the construction of the building is going very fast and the slab of the 5 th
floor is already completed progressing very well as can be seen in the picture
below.
3.9 DECORATION, EQUIPMENT AND UTILITY

The following list of decoration and auxiliary equipmentare required to make the
apartments functional. Decoration equipment & furniture are Pool, chairs, Table,Art
Painting&Leisure Sofa for the common amenities where as full kitchen cabinet
equipment&built in closet for the apartment flats. The total cost of machineries and
related cost is about Birr 187,408.30as shown below.
TABLE 11: DECORATION, EQUIPMENT AND UTILITY

Main
Unit Price for
Furnishing Total Price for
No Description Size （㎡） Furnishing(USD)/ Remark
Material Furnishing(USD)
M2
Description
Service area
and amenities
Ground Floor
1 Administrative Shelf, table &
8.35 100.00 835.00
office chair
2 Leisure Sofa、
Table, Art
Sitting area 14.13 50.00 706.50
Pendant Lamp,
Art Painting
3 Art Painting,
Corridor 18 café table, 12.00 216.00
chair
4 Bed, locker,
Guard Room 8.16 40.00 326.40
table & chair
5 Leisure Sofa,
Table, Art
Reception 26.63 50.00 1,331.50
Pendant Lamp,
Art Painting
Page 20
Main
Unit Price for
Furnishing Total Price for
No Description Size （㎡） Furnishing(USD)/ Remark
Material Furnishing(USD)
M2
Description
6 Elevator Hall 8 Art Painting, 20.00 160.00
Ground - 6th
floor
1 For 7 story
Elevator Hall 48 Art Painting 12.00 576.00
project
SUM 4,151.40
Apartments
Ground floor
Full kitchen
(one Three bed
cabinet For 1
1 room 119.05 50.00 5,952.50
equipment, apartment
apartments 119
built in closet
M2)
1st floor (two Full kitchen
bed room cabinet For 2
2 239 50.00 11,950.00
apartments 119 equipment, apartments
M2) built in closet
2nd to 6th floor Full kitchen
(nine two bed cabinet
For 9
3 room 687.83 equipment, 80.00 55,026.40
apartments
apartments built in waking
each 111 m2) closet
Full kitchen
cabinet
4 6th 316.60 equipment, 80.00 25,328.00
built in waking
closet
SUM 98,256.90
Auxiliary equipment
1 Generator 600
1 set 15,000.00 15,000.00
KVA
2 Elevator 1 set 45,000.00 45,000.00
3 Transformer &
electric line 1 set 25,000.00 25,000.00
connection
SUM 85,000.00
Total hotel
equipment and 187,408.30
furniture(USD)
Page 20
APARTMENT FEASIBILITY STUDY
4. PROJECT IMPLEMENTATION
The implementation program discussed below includes civil work, building

construction, furnishing of the apartments. Activities for the implementation of the
project in the chart below shows that it will take about 9 months to commence
operation. The various activities that are to be completed as per the sequence and
time schedules are indicated below.
FIGURE 6: PROJECT IMPLEMENTATION SCHEDULE
Months
Description
1 2 3 4 5 6 7 8 9
Apartmentbuilding construction
Decoration, fixing an equipment
Recruitment and training
Commencement of operation
Page 33
LC
33
FEASIBILITY STUDY FOR REAL ESTATE APARTMENT
5. ORGANIZATIONAL & MANAGEMENT
The activities of the project are divided into two independents but yet overlapping
phases:
A. The Project Phase: which include construction of the building and acquisition
of equipment, etc.
B. The Operations Phase: Is the main operational activity of selling the
apartment.
5.1 ORGANIZATIONAL STRUCTURE

The organization structure shows that the company will undertake functional
management structure. There are the managerial department of administration and
financeand marketing departments. There will be planning and IT service, legal and
audit services that assists the manager or the project coordinator as consultant. A
project coordinator assisted by a deputy or assistant project coordinator manages
the coordinating office.
It is understood that for successful and sustainable operation in general it needs a

join minds and efforts and put in appropriate place with modern management as
well as market-oriented technologies.
The proposed project is structured to have a General Manager who is responsible to

plan, organize, coordinate and supervise overall activities of the project. It will have
four functionally related departments namely, operation, Marketing & sales,
Administration & Finance and procurement & logistic. The heads of these
departments are accountable to the General Manager of the project.
The organizational structure of the envisaged project depicting the various

relationships of departments and sections is given below.
Page 59
FIGURE 7: ORGANIZATION STRUCTURE
General Manager
Finance and Purchasing and

Marketing section
Adminstrative section procrument section
5.2 MANPOWER PLAN

Staffing assumes that the company will be operational in a full at the
commencement of operation, about 10 Ethiopian are estimated to be employed in
the company in a permanent basis as shown below. Also hires more than 100
temporary employees during the construction time.
TABLE 12: HUMAN RESOURCE REQUIREMENT
No. of Yearly
Salary per
Employe salary(in
month (in Birr)
es Birr)
Manager office
General Manager 1 20,000 240,000
Executive Secretary 1 3,750 45,000
Auditor 1 7,000 84,000
Sub total 3 369,000
Administration and
finance
Admin. & finance manager 1 10,000 120,000
Accountants 1 4,500 54,000
Sub total 174,000
Marketing Study,
Promotion and Sales
Marketing manager 1 10,000 120,000
Sales persons 4 6,000 288,000
Sub total 7 17,500 288,000
Total 831,000
Total No
Description of Salary per annum
personnel
General Manager office 3 369,000
Page 59
Administration and
7 288,000
finance
Total 10 657,000
5.3 AVAILABILITY OF MANPOWER

Even though the core operation of the company requires having knowledge, skill
and experience on the part of employees it could be fulfill by having on job training
by people from similar or hotel industry. In addition, the envisaged project is to be
established in Addis Ababa where there is potentially enough manpower. Hence,
whether during implementation or operational phases, there would be abundant
skilled and semi-skilled job seekers in the labor market who will be willing to join the
company.
5.4 EMPLOYEE BENEFITS

As part of its initiatives to have a motivated and capable work force at all times, the
company extends to its employees the following employee benefits package
starting from the implementation phase:
 Pension fund,
 Medical service,
 Insurance,
 Uniform and safety devices,
 Loan facilities depending up on the financial position of the company,
 Canteen subsidy, etc.
On top of this, there is a plan to introduce Performance Incentive Scheme for core
staff of the company that undoubtedly benefits both parties in terms of uniting their
objectives towards meeting organizational goals and objectives.
5.5 RECRUITING AND TRAINING PLAN

Once the task of implementation of the project is completed, hiring of both
managerial and operational personnel shall follow suit based on its pre-designed
staffing plan. In the training dimension, an arrangement is to be made with the
personnel trainer to train the Personnel on the customer handling and service
provision.
Page 59
Page 59
6. FINANCIAL ANALYSIS
Financial Feasibility analysis provides a basis for a decision as to whether to

proceed or not with the establishment of the project. The basic assumption for
financial analysis of the project is presented in key assumption part of this study.
The financial study of the project is conducted by considering the current changes
price, technology and systems of productions.
6.1 INVESTMENT COSTS AND SOURCES OF FINANCE
As shown in table below the total investment required for the project is estimated to
be Birr 61,077,272investment. The cost covers initial fixed investment costs of Birr
51,306,760, working capital requirements and pre-operating expenses of Birr
9,770,512.
TABLE 13: TOTAL INITIAL INVESTMENT

Capital contribution
Description Total (Birr) Loan (Birr)
(Birr)
Land lease 5,000,000 5,000,000 -
Building construction 40,254,000 12,881,280 27,372,720
Decoration and Equipment 6,052,760 - 6,052,760
Sub-total Fixed investment 51,306,760 17,881,280 33,425,480
500,000 -
Pre-operating expense 500,000
working capital 7,889,905 7,889,905
Total Investment Required 59,696,665 18,381,280 41,315,385
Investment Structure Capital/Loan %
Capital contribution 18,381,280 31%
Loan 41,315,385 69%
Total initial investment 9,696,665
The sources of finance for the total investment will be equity capital and long-term
loan obtained from Abay Bank loan. Of the total investment, Birr 41,315,385 (69%)
expected to be financed by the Banks where the promoters will invest the
remaining half Birr 18,381,280 (31%) of the investment.
Page 59
6.2 FEASIBILITY ANALYSIS
6.2.1 INCOME STATEMENT

The projection for the income statement is primarily derived from apartments sales
estimates which is based on an adequate market assessment and guaranteed sales
from previous experiences. The two bed room apartment flats of 123 M 2 will be sold
at Birr 13.6 million and three bed room apartment flats of 119.05 will be sold at birr
6.5 million.
TABLE 14: SALES OF APARTMENT BUILDING
Selling price Selling price

apartment type Location Size (M2) QTY Total sales(Br)
in Birr/ M2 Birr/ Unit
Three bed rooms apartment Ground floor 119.05 1 55,000 6,547,750 6,547,750
Two bed rooms apartment 1st floor 123.65 2 55,000 6,800,750 13,601,500
Two bed rooms apartment 1st floor and 2nd to 6th floor 115.35 9 55,000 6,344,250 57,098,250
-
Total 12 77,247,500
After project implementation the company is expected to generate sales of Birr

77,247,500in the first year of operation and that will increase to Birr160,180,416at
the end of the fifth year. The cost of sales estimated to be Birr 56,641,148expected
to reach Birr114,123,442. The company expected to generate a net profit of
Birr9,363,312in the first year of operation and that will increase to Birr 32,239,882at
the end of the fifth year.
TABLE 15: SUMMARY OF INCOME STATEMENT

Year 1 Year 2 Year 3 Year 4 Year 5
Sales Revenue 77,247,500 92,697,000 111,236,400 133,483,680 160,180,416
Total Operation Cost 56,641,148 67,361,605 80,217,348 95,634,307 114,123,442
EBIT 20,606,352 25,335,395 31,019,052 37,849,373 46,056,974
Interest 7,230,192 7,230,192 3,905,966
EBT 13,376,160 18,105,203 27,113,086 37,849,373 46,056,974
Income tax (30%) 4,012,848 5,431,561 8,133,926 11,354,812 13,817,092
EAT 9,363,312 12,673,642 18,979,160 26,494,561 32,239,882
Page 59
6.2.2 PROFITABILITY RATIOS
Ratio Analysis
Liquidity Ratios
Current Ratio 4.06 (25.22) 22.50 66.46 90.83
Quick Ratio 27.78 27.06 26.34 25.74 25.24
Net Working Capital Ratio 0.16 0.24 0.20 0.17 0.15

Current Liabilities to
Inventory Ratio 1.11 1.33 1.33 1.33 1.33
Asset Ratios Year 1 Year 2 Year 3 Year 4 Year 5
Inventory Turnover Ratio 300.00 360.00 360.00 360.00 360.00
Fixed Assets Turnover Ratio 1.58 2.01 2.55 3.25 3.60
Total Assets Ratio 1.53 2.44 2.09 1.80 1.63
Asset to Equity Ratio 2.02 1.12 1.13 1.13 1.12
Solvency ratios
Total Debt Ratio 0.50 0.11 0.11 0.11 0.10
Interest Coverage Ratio 2.85 3.50 7.94 #DIV/ 0! #DIV/ 0!
Solvency ratios 1.98 9.16 8.71 8.78 9.59
Debt/ Equity Ratio 1.02 0.12 0.13 0.13 0.12
Profitability Ratios
Earnings per Share 0.51 0.69 1.03 1.44 1.75
(EPS) Ratio
Basic Earnings Power Ratio 0.41 0.67 0.58 0.51 0.47
Price to Earnings Ratio(15X) 29.45 21.76 14.53 10.41 8.55
Price to Cash Flow Ratio (39.29) (15.20) (146.30) 14.01 7.19
Payout Ratio 0.30 0.30 0.30 0.30 0.30
Gross Profit margin 0.27 0.27 0.28 0.28 0.29
Net profit margin 12% 14% 17% 20% 20%
ROI 51% 69% 103% 144% 175%

Return on Investment
ROA 19% 33% 36% 36% 33%
ROCE
Return on Capital Employed 42% 54% 71% 92% 103%
Return on Assets Ratio 1.29 1.84 2.93 2.51 2.16
Return on Equity Ratio 0.32 0.31 0.34 0.34 0.32
Page 59
6.2.3 BALANCE SHEET

Net Capital of the company will grow from Birr18,381,280in the first year to
Birr65,638,752 during fifth year of operation. The IRR (Internal Rate of Return) of
the project for total investment is found to be 29% with the above economic rate of
return, the project is found economically viable and attractive for investment.
6.2.4 CASH FLOW

The cumulative cash flow projection shows cash balance of Birr 38,324,396 at the
end of the fifth year.
6.2.5 SENSITIVITY ANLYSIS

Sensitivity analyses on selected cost components have been further conducted to
test the strength and viability of the project. In view of this, extreme conditions like
cost escalation on production cost and a decrease of sales price due to various
factors have been therefore examined. The result of the sensitivity analysis shows
the project is viable both with an increase of 10% in cost of production with IRR of
27% & 10% decline at price with IRR of 18%.
TABLE 16: SENSITIVITY ANALYSIS ON KEY VARIABLES

Item IRR in % NPV (in Million)
Production Cost
Increase By 10% 27 44
Revenue
Decrease By 10% 18 8
Theresults of the feasibility study conducted indicate that the project has strong
potential to be successful. The market for apartment flats is projected to grow in the
coming years.
Page 59
Page 59
Investment
Detail investement on equipment and building materials
Equipment and decorating materials
Unit Price for

Main Furnishing Material Total Price for
No Description Size （㎡） Furnishing(USD) Remark
Description Furnishing(USD)
/ M2
Service area and aminities
Ground Floor
1 Admisntrative office 8.35 Shelf, table & chair 100.00 835.00
2 Sitting area 14.13 Leisure Sofa、 Table、 Art 50.00 706.50
Pendant Lamp、 Art Painting
3 Corridor 18 Art Painting, café table, chair 12.00 216.00
4 Guard Room 8.16 Bed, locker, table & chair 40.00 326.40
5 Reception 26.63 Leisure Sofa、 Table、 Art 50.00 1,331.50
Pendant Lamp、 Art Painting
6 Elevator Hall 8 Art Painting, 20.00 160.00
Ground - 6th floor
1 Elevator Hall 48 Art Painting 12.00 576.00 For 7 storey
project
SUM 4,151.40
Apartments
Ground floor (one Three bed room Full kitchen cabinate 50.00 5,952.50 For 1 apartment
1 119.05
appartments 119 M2) equipment, built in closet
1st floor (two two bed room Full kitchen cabinate 50.00 11,950.00 For 2 apartments
2 239
appartments 119 M2) equipment, built in closet
2nd to 6th floor (nine two bed room Full kitchen cabinate 80.00 55,026.40 For 9 apartments
3 appartments each 111 m2) 687.83 equipment, built in wakin closet
6th Full kitchen cabinate 80.00 25,328.00 For 1 pent house

4 316.60 equipment, built in wakin closet
SUM 98,256.90
Auxilary equipment
1 Generator 600 kva 1 set 15,000.00 15,000.00
2 Elevator 1 set 45,000.00 45,000.00
3 Transformer & electric line connecton 1 set 25,000.00 25,000.00
SUM 85,000.00
Total hotel equipment and furniture(USD) 187,408.30
Page 43
LC
43
Fact sheet Table of content
Employees benefit 15% of wage and salaries

Spare parts 50,000 Birr/ annum
Professional Expense(Legal, Audit, consultancy etc) 50,000 Birr/ annum
Office supplies 80,000 Birr/ annum
Miscellaneous Expense 30,000 Birr/ annum
Dividend 30% of net income
Advertisement Expense 60,000 Birr/ annum
Marketing Expense 40,000 Birr/ annum
Electric charge 0.8000 Birr/ kwh + 134 service charge

3
Water charge 4.7500 Birr/ M
Fuel cost Diesel 14.00 BIrr/ litter
Regular 14.00 BIrr/ litter
Oil & lubricant 10% of fuel cost
Insurance rate fire, lightening & flood 1.5% of building & machinery cost
Vehicle 4% of vehicle cost
Exchange rate as of Aug 2018 USD 28.01 Birr
5% Electric line installation and connection

Depreciation 5% Building Construction Costs
10% Plant machineries and Equipment
Advance payment for power supply
5%
from main line
20% Motor Vehicles
10% Office Furniture & Equipment
10% Pre- production expense
Repair & maintainace 0.5% For building & furniture

1% For machinery & equipment
0.5% For furniture & fixture
3% For vehicle
Yearly Increase in Expenses Fuel And Lubricants 1.05

Raw Material 1.05
Labor Salary 1.05
General Increase in Costs 1.05
Forex Depr. 5%
Tax Rate 30%
Average inflation 7.0%
Discount Rate 10%
Grace Period On Repayment of Loan 6 months
Interest rate on long term loan 17.5%
Loan repayment year 3 year(s)
Page 59
Assumptions
Assumption Employed in the Financial Study
1 Revenue from sales of apprtements
Selling price Selling price

apartment type Location Size (M2) Qty Total sales(Br)
in Birr/ M2 Birr/ Unit
Three bed rooms appartement Ground floor 119.05 1 55,000 6,547,750 6,547,750
Two bed rooms appartement 1st floor 123.65 2 55,000 6,800,750 13,601,500
Two bed rooms appartement 1st floor and 2nd to 6th floor 115.35 9 55,000 6,344,250 57,098,250
-
Total 12 77,247,500
2 Revenue at year basis rate
Year Total Revenue

1 77,247,500
2 92,697,000
3 111,236,400
4 133,483,680
5 160,180,416
3 Summary of Revenue
SOURCES OF INCOME Year 1 Year 2 Year 3 Year 4 Year 5

Sales of apprtement flats Birr 77,247,500 92,697,000 111,236,400 133,483,680 160,180,416
TOTAL 77,247,500 92,697,000 111,236,400 133,483,680 160,180,416
4 Direct cost of construciton & equipment
Direct costs Year 1 Year 2 Year 3 Year 4 Year 5

Land cost Birr 5,000,000 6,000,000 7,200,000 8,640,000 10,368,000
Cost of building construction Birr 40,254,000 48,304,800 57,965,760 69,558,912 83,470,694
Appartement equipment and decoration Birr 6,052,760 7,263,312 8,715,975 10,459,169 12,551,003
TOTAL 51,306,760 61,568,112 73,881,735 88,658,081 106,389,698
14 Operating costs
Cost of sales (Sales comission)
Descriptions %
Cost of sales (Commission for sales
persons) 2%
Summary operating ost
Description Year 1 Year 2 Year 3 Year 4 Year 5

Cost of sales (Commission for sales persons) Birr 1,544,950 1,853,940 2,224,728 2,669,674 3,203,608
TOTAL 1,544,950 1,853,940 2,224,728 2,669,674 3,203,608
Page 59
1 Basement 10 car parking space
2 Ground floor
space(m2)
Admisntrative office 8.35
Sitting area 14.13
Corridor 18
Guard Room 8.16
Aminities
Toilet 6.31
Balcony 8.75
Reception 26.63
Total 90.33
Three bed rooms appartement
Lobby 4.38
Living Room 17.52
corridor 6.82
1st bed room 12.02
1 rooms/ floor 2nd bed room 12.02
Guest toilet 6.83
Store & laundary room 5.63
Balcony 10.78
Total 119.05
2 1st floor
space(m2)
Two bed rooms appartement
Living Room 25.35
Balcony 1 6.62
corridor 7.94
Walk in closet 5.4
Balcony 2 3.81
Total 115.35
2 rooms/ floor Two bed rooms appartement
Living Room 25.35
Store 1 3.6
Balcony 1 Page 59 6.62
corridor 7.94
FEASIB IMaster
L I T Y S bed
T U D room
Y FOR REAL ESTATE APARTMENT 22.38
Walk in closet 5.4
Balcony 2 3.81
Total 115.35
2 rooms/ floor Two bed rooms appartement
Living Room 25.35
Store 1 3.6
Balcony 1 6.62
corridor 7.94
Store & laundary room 2 4.49
Walk in closet 5.4
Balcony 2 3.81
Total 123.65
Typical 2nd - 5th floor
Two bed rooms appartement space( m2)

Living Room 25.35
Balcony 1 6.62
corridor 7.94
2 rooms/ floor
Walk in closet 5.4
Balcony 2 3.81
Total 115.35
6 th & 7th floor
Two bed rooms appartement space( m2)

Living Room 25.35
Balcony 1 6.62
corridor 7.94
2 rooms/ floor Guest toilet 2.73
Walk in closet 5.4
Balcony 2 3.81
Total 111.08
Page 59
PROJ ECT BASICS
Revenue summary
Description Year 1 Year 2 Year 3 Year 4 Year 5
Revenue from sales 77,247,500 92,697,000 111,236,400 133,483,680 160,180,416
HUMAN RESOURCE REQUIREMENT
J ob Title Year 1 Year 2 Year 3 Year 4 Year 5
DIRECT PRODUCTION LABOERS (DPL) - - - - -

Marketing and sales 288,000 331,200 380,880 438,012 503,714
General and Admin 543,000 624,450 718,118 825,835 949,710
DEPRECIATION & AMORTIZATION
Year 2 >Year 11
Description Total cost
Cost of D & A
Building 45,254,000 2,262,700 2,262,700
Decoration and Equipment 6,052,760 302,638 302,638
Pre-production cost & expense 500,000 50,000 50,000

- -
Total (USD) 51,806,760 2,615,338 2,615,338
Page 59
Financial Statements
I ncome Statement
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year
Sales Revenue 77,247,500 92,697,000 111,236,400 133,483,680 160,180,416 168,189,437 176,598,909 185,428,854 194,700,297 204,435,31
Land cost 5,000,000 6,000,000 7,200,000 8,640,000 10,368,000 10,886,400 11,430,720 12,002,256 12,602,369 13,232,48
Cost of building construction 40,254,000 48,304,800 57,965,760 69,558,912 83,470,694 87,644,229 92,026,441 96,627,763 101,459,151 106,532,10
Appartement equipment and
decoration 6,052,760 7,263,312 8,715,975 10,459,169 12,551,003 13,178,553 13,837,481 14,529,355 15,255,823 16,018,61
Cost of sales (Commission for
sales persons) 1,544,950 1,853,940 2,224,728 2,669,674 3,203,608 3,363,789 3,531,978 3,708,577 3,894,006 4,088,70
Labor and staff - - - - - - - - - -
Labor and staff benefit - - - - - - - - - -
Direct Cost 52,851,710 63,422,052 76,106,463 91,327,755 109,593,306 115,072,971 120,826,620 126,867,951 133,211,348 139,871,91
Administration & Selling

Expenses 1,174,100 1,324,215 1,495,547 1,691,214 1,914,798 2,090,476 2,282,932 2,493,804 2,724,893 2,978,17
administration expenses 727,300 823,395 933,254 1,058,910 1,202,697 1,315,066 1,438,277 1,573,394 1,721,587 1,884,14
Professional Expense 50,000 52,500 55,125 57,881 60,775 63,814 67,005 70,355 73,873 77,56
Office supplies 80,000 84,000 88,200 92,610 97,241 102,103 107,208 112,568 118,196 124,10
Administrative staff Salary 543,000 624,450 718,118 825,835 949,710 1,044,681 1,149,150 1,264,065 1,390,471 1,529,51
Administrative staff Benefit 54,300 62,445 71,812 82,584 94,971 104,468 114,915 126,406 139,047 152,95
Selling expenses 416,800 469,320 529,218 597,576 675,636 737,122 804,453 878,197 958,982 1,047,49
Advertisement Expense 60,000 63,000 66,150 69,458 72,930 76,577 80,406 84,426 88,647 93,08
Marketing Expense 40,000 42,000 44,100 46,305 48,620 51,051 53,604 56,284 59,098 62,05
Marketing staff 288,000 331,200 380,880 438,012 503,714 554,085 609,494 670,443 737,487 811,23
Marketing staff benfit 28,800 33,120 38,088 43,801 50,371 55,409 60,949 67,044 73,749 81,12
Miscellaneous Expense 30,000 31,500 33,075 34,729 36,465 38,288 40,203 42,213 44,324 46,54
Operating Costs 1,174,100 1,324,215 1,495,547 1,691,214 1,914,798 2,090,476 2,282,932 2,493,804 2,724,893 2,978,17
Depreciation 2,615,338 2,615,338 2,615,338 2,615,338 2,615,338 2,615,338 2,615,338 2,615,338 2,615,338 2,615,33
Total Operation Cost 56,641,148 67,361,605 80,217,348 95,634,307 114,123,442 119,778,786 125,724,890 131,977,093 138,551,579 145,465,42
EBIT 20,606,352 25,335,395 31,019,052 37,849,373 46,056,974 48,410,651 50,874,018 53,451,761 56,148,718 58,969,88
Interest 7,230,192 7,230,192 3,905,966
EBT 13,376,160 18,105,203 27,113,086 37,849,373 46,056,974 48,410,651 50,874,018 53,451,761 56,148,718 58,969,88
Income tax (30%) 4,012,848 5,431,561 8,133,926 11,354,812 13,817,092 14,523,195 15,262,205 16,035,528 16,844,615 17,690,96
EAT 9,363,312 12,673,642 18,979,160 26,494,561 32,239,882 33,887,456 35,611,813 37,416,232 39,304,102 41,278,91
Page 49
LC
49
Projected Balance Sheet
Inv't Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
ASSETS
CURRENT ASSETS
Cash Balance (7,016,930) (18,138,698) (1,884,631) 19,685,513 38,324,396 64,490,662 91,853,786 120,469,133 150,394,389 181,689,635
Current assets 8,174,943 8,174,943 9,513,899 11,120,647 13,048,745 15,362,462 16,056,577 16,785,398 17,550,660 18,354,185 19,197,886
Total Current Assets 8,174,943 1,158,013 (8,624,799) 9,236,016 32,734,257 53,686,858 80,547,239 108,639,184 138,019,792 168,748,574 200,887,521
FIXED ASSETS
Land lease 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000
Building 40,254,000 37,991,300 35,728,600 33,465,900 31,203,200 28,940,500 26,677,800 24,415,100 22,152,400 19,889,700 17,627,000
0 - - - - - - - - - - -
Hotel furniture and equipement 6,052,760 5,750,122 5,447,484 5,144,846 4,842,208 10,592,330 10,289,692 9,987,054 9,684,416 9,381,778 9,079,140
Total Fixed Assets 51,306,760 48,741,422 46,176,084 43,610,746 41,045,408 44,532,830 41,967,492 39,402,154 36,836,816 34,271,478 31,706,140
Pre- Production Cost and
500,000 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 -
interest
Total Assets 59,981,703 50,349,435 37,951,285 53,196,762 74,079,665 98,469,688 122,714,732 148,191,338 174,956,609 203,070,052 232,593,661
LI ABI LI TI ES & Capital
LIABILITIES:
Current liabilities 285,038 285,038 342,045 410,454 492,545 591,054 620,607 651,637 684,219 718,430 754,351
Dividend Payable 2,808,994 3,802,093 5,693,748 7,948,368 9,671,964 10,166,237 10,683,544 11,224,870 11,791,231 12,383,675
Long term loan
Bank Loan 41,315,385 22,319,806
Sub Total 41,600,423 25,413,837 4,144,138 6,104,202 8,440,913 10,263,018 10,786,843 11,335,181 11,909,088 12,509,660 13,138,027
CAPITAL:
Owner's Equity 18,381,280 18,381,280 18,381,280 18,381,280 18,381,280 18,381,280 18,381,280 18,381,280 18,381,280 18,381,280 18,381,280
Retained Earnings 6,554,318 15,425,867 28,711,280 47,257,472 69,825,389 93,546,608 118,474,877 144,666,240 172,179,112 201,074,354
Sub total 18,381,280 24,935,598 33,807,147 47,092,560 65,638,752 88,206,669 111,927,888 136,856,157 163,047,520 190,560,392 219,455,634
Total Liabil.& Capital 59,981,703 50,349,435 37,951,285 53,196,762 74,079,665 98,469,688 122,714,732 148,191,338 174,956,609 203,070,052 232,593,661
Page 59
Page 59
Working Capital Determination
Coverage Inv't Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
CURRENT ASSETS
Accounts Receivable 30 6,437,292 6,437,292 7,724,750 9,269,700 11,123,640 13,348,368 14,015,786 14,716,576 15,452,405 16,225,025 17,036,276
Inventory 257,492 257,492 308,990 370,788 444,946 533,935 560,631 588,663 618,096 649,001 681,451
Cost of sales (Commission for

60 257,492 257,492 308,990 370,788 444,946 533,935 560,631 588,663 618,096 649,001 681,451
sales persons)
Cash in hand(Petty cash) 10 1,480,159 1,480,159 1,480,159 1,480,159 1,480,159 1,480,159 1,480,159 1,480,159 1,480,159 1,480,159 1,480,159
Total Current Assets 8,174,943 8,174,943 9,513,899 11,120,647 13,048,745 15,362,462 16,056,577 16,785,398 17,550,660 18,354,185 19,197,886
Increase in current Assets 1,338,957 1,606,748 1,928,098 2,313,717 694,115 728,821 765,262 803,525 843,701
CURRENT LIABILITIES
Accounts Payable 2 285,038 285,038 342,045 410,454 492,545 591,054 620,607 651,637 684,219 718,430 754,351
Increase in current liabilities 57,008 68,409 82,091 98,509 29,553 31,030 32,582 34,211 35,921
WORKING CAPITAL
Net working Capital 7,889,905 7,889,905 9,171,854 10,710,193 12,556,200 14,771,408 15,435,970 16,133,761 16,866,441 17,635,755 18,443,535
Existing working Capital -
Increase in working capital 7,889,905 - 1,281,949 1,538,339 1,846,007 2,215,208 664,562 697,791 732,680 769,314 807,780
Page 59
Page 59
Operating cost increased by 10%
Descriptions
INV'T Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Total Investment cost in Birr - 59,696,665
Total Revenue 77,247,500 92,697,000 111,236,400 133,483,680 160,180,416 168,189,437 176,598,909 185,428,854 194,700,297 204,435,312
Less: Operating cost 59,428,391 71,220,894 85,362,211 102,320,866 122,658,915 128,879,793 135,420,508 142,297,931 149,529,865 157,135,100
Gross Profit 17,819,109 21,476,106 25,874,189 31,162,814 37,521,501 39,309,644 41,178,401 43,130,923 45,170,432 47,300,212
Less: Interest Expense 7,230,192 7,230,192 3,905,966 - - - - - - -
Deprecation and Amortization 2,615,338 2,615,338 2,615,338 2,615,338 2,615,338 2,615,338 2,615,338 2,615,338 2,615,338 2,615,338
Profit Before Tax 7,973,579 11,630,576 19,352,885 28,547,476 34,906,163 36,694,306 38,563,063 40,515,585 42,555,094 44,684,874
Less :Corp. Income Tax @ 30% 2,392,074 3,489,173 5,805,866 8,564,243 10,471,849 11,008,292 11,568,919 12,154,676 12,766,528 13,405,462
Profit After Tax 5,581,505 8,141,403 13,547,020 19,983,233 24,434,314 25,686,014 26,994,144 28,360,910 29,788,566 31,279,412
Add: Deprecation and Amortization 2,615,338 2,615,338 2,615,338 2,615,338 2,615,338 2,615,338 2,615,338 2,615,338 2,615,338 2,615,338
Less: Capital expenditure - - - - - - - - - -
Debt Finance In/out 41,315,385 (18,995,579) (22,319,806) - - - - - - - -
Add: Interest 7,013,287 7,013,287 3,788,787 - - - - - - -
Add or deduct: Working capital - (1,281,949) (1,538,339) (1,846,007) (2,215,208) (664,562) (697,791) (732,680) (769,314) (807,780)
Free cash flow- Total investment - 59,696,665 (3,785,450) (4,549,778) 19,951,145 22,598,571 27,049,652 28,301,352 29,609,482 30,976,248 32,403,904 33,894,750
Free cash flow- Debt - 41,315,385 (3,785,450) (4,549,778) 19,951,145 22,598,571 27,049,652 28,301,352 29,609,482 30,976,248 32,403,904 33,894,750
14 65 61.53 59.30
(764,328) 68,031,893 48,080,748 25,482,177
Total investment (764,328) 26,716,508 6,765,363 (15,833,208)

- 58 2.02 16.07 3.59 (7.02)
NPV (35,121,425)
IRR 21% - 8,335,228 11,615,917 34,214,488 61,264,140
Page 59
Revenue decreased by 10%
Descriptions
INV'T Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Total Investment cost in Birr - 59,696,665
Total Revenue 69,522,750 83,427,300 100,112,760 120,135,312 144,162,374 151,370,493 158,939,018 166,885,969 175,230,267 183,991,780
Less: Operating cost 54,025,810 64,746,267 77,602,010 93,018,969 111,508,104 117,163,448 123,109,552 129,361,755 135,936,241 142,850,091
Gross Profit 15,496,940 18,681,033 22,510,750 27,116,343 32,654,270 34,207,045 35,829,465 37,524,213 39,294,026 41,141,690
Less: Interest Expense 7,230,192 7,230,192 3,905,966 - - - - - - -
Deprecation and Amortization 2,615,338 2,615,338 2,615,338 2,615,338 2,615,338 2,615,338 2,615,338 2,615,338 2,615,338 2,615,338
Profit Before Tax 5,651,410 8,835,503 15,989,446 24,501,005 30,038,932 31,591,707 33,214,127 34,908,875 36,678,688 38,526,352
Less :Corp. Income Tax @ 30% 1,695,423 2,650,651 4,796,834 7,350,301 9,011,680 9,477,512 9,964,238 10,472,663 11,003,606 11,557,905
Profit After Tax 3,955,987 6,184,852 11,192,612 17,150,703 21,027,252 22,114,195 23,249,889 24,436,213 25,675,082 26,968,446
Add: Deprecation and Amortization 2,615,338 2,615,338 2,615,338 2,615,338 2,615,338 2,615,338 2,615,338 2,615,338 2,615,338 2,615,338
Less: Capital expenditure - - - - - - - - - -
Debt Finance In/out 41,315,385 (18,995,579) (22,319,806) - - - - - - - -
Add: Interest 7,013,287 7,013,287 3,788,787 - - - - - - -
Add or deduct: Working capital - (1,281,949) (1,538,339) (1,846,007) (2,215,208) (664,562) (697,791) (732,680) (769,314) (807,780)
Free cash flow- Total investment - 59,696,665 (5,410,968) (6,506,329) 17,596,737 19,766,041 23,642,590 24,729,533 25,865,227 27,051,551 28,290,420 29,583,784
Free cash flow- Debt - 41,315,385 (5,410,968) (6,506,329) 17,596,737 19,766,041 23,642,590 24,729,533 25,865,227 27,051,551 28,290,420 29,583,784
14 73 68.79 65.38
(1,095,361) 71,613,962 54,017,225 34,251,184
NPV 8,623,590
IRR 18% - 11,917,297 5,679,440 25,445,481 49,088,072
Pay back period 33 months
Page 59
Ratio Analysis
Liquidity Ratios
Current Ratio 4.06 (25.22) 22.50 66.46 90.83
Quick Ratio 27.78 27.06 26.34 25.74 25.24
Net Working Capital Ratio 0.16 0.24 0.20 0.17 0.15

Current Liabilities to
I nventory Ratio 1.11 1.33 1.33 1.33 1.33
Asset Ratios Year 1 Year 2 Year 3 Year 4 Year 5
I nventory Turnover Ratio 300.00 360.00 360.00 360.00 360.00
Fixed Assets Turnover Ratio 1.58 2.01 2.55 3.25 3.60
Total Assets Ratio 1.53 2.44 2.09 1.80 1.63
Asset to Equity Ratio 2.02 1.12 1.13 1.13 1.12
Solvency ratios
Total Debt Ratio 0.50 0.11 0.11 0.11 0.10
I nterest Coverage Ratio 2.85 3.50 7.94 #DI V/ 0! #DI V/ 0!
Solvency ratios 1.98 9.16 8.71 8.78 9.59
Debt/ Equity Ratio 1.02 0.12 0.13 0.13 0.12
Profitability Ratios
Earnings per Share 0.51 0.69 1.03 1.44 1.75
(EPS) Ratio
Basic Earnings Power Ratio 0.41 0.67 0.58 0.51 0.47
Price to Earnings Ratio(15X) 29.45 21.76 14.53 10.41 8.55
Price to Cash Flow Ratio (39.29) (15.20) (146.30) 14.01 7.19
Payout Ratio 0.30 0.30 0.30 0.30 0.30
Gross Profit margin 0.27 0.27 0.28 0.28 0.29
Net profit margin 12% 14% 17% 20% 20%
ROI 51% 69% 103% 144% 175%

Return on I nvestment
ROA 19% 33% 36% 36% 33%
ROCE
Return on Capital Employed 42% 54% 71% 92% 103%
Return on Assets Ratio 1.29 1.84 2.93 2.51 2.16
Return on Equity Ratio 0.32 0.31 0.34 0.34 0.32
Page 56
LC
56
Planned investment financing structure

0.7
Capital contribution
Description Total (Birr) Loan (Birr)
(Birr)
Land lease 5,000,000 5,000,000 -

Building construction 40,254,000 12,881,280 27,372,720
Decoration and Equipment 6,052,760 - 6,052,760
Sub total Fixed investment 51,306,760 17,881,280 33,425,480
Pre operating expense 500,000 500,000 -
working capital 7,889,905 7,889,905
Total Investment Required 59,696,665 18,381,280 41,315,385
Investment Structure Capital/ Loan %

Capital contribution 18,381,280 31%
Loan 41,315,385 69%
Total initial investment 59,696,665
Loan repayment plan
Loan amount: 41,315,385 Birr

Interest rate: 17.5%
Grace period: 2 Year
Principal Total Outstanding

Year Interest
Repayment Payment Balance
I mplementation
Period
1 7,230,192 41,315,385
Operation period
2 7,230,192 18,995,579 26,225,772 22,319,806
3,905,966 22,319,806 26,225,772 0

3
Page 59
Human Resource Detail

Marketing and sales 288,000 331,200 380,880 438,012 503,714
General and Administration 543,000 624,450 718,118 825,835 949,710
Total 831,000 955,650 1,098,998 1,263,847 1,453,424
15% salary increase per annum

10% other benfit on the salary
No. of Salary Yearly salary

Employees per month (in Birr) (in Birr)
Operation Department
No. of Salary Yearly salary
Manager office
Employees per month (in Birr) (in Birr)
General Manager 1 20,000 240,000
Executive Secretary 1 3,750 45,000
Auditor 1 7,000 84,000
Sub total 3 369,000
Administration and Salary per
No of employee Salary per month
finance annum
Admin. & finance
1 10,000 120,000
manager
Accountants 1 4,500 54,000
Sub total 174,000
Marketing Study,
Promotion and Sales
Marketing manager 1 10,000 120,000
Sales persons 4 6,000 288,000
Sub total 7 17,500 288,000
Total 831,000
Total No of
Description Salary per annum
personel
General Manager office 3 369,000
Administration and
7 288,000
finance
Total 10 657,000
Page 59
Page 59
PLC
59

Wondwosen Alemu Apartment Study FS

Uploaded by

Copyright:

Available Formats

Wondwosen Alemu Apartment Study FS

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Wondwosen Alemu Apartment Study FS

Uploaded by

Copyright:

Available Formats

LED LAMP PRODUCTION FESIABLITY STUDY

FIGURE 1: GDP GROWTH....................................................................................................12

TABLE 1: TYPES OF APARTMENTS...................................................................................11

ITC – INTERNATIONAL TRADE CENTER

COMESA - COMMON MARKET FOR EASTERN & SOUTHERN AFRICA

WTO – WORLD TRADE ORGANIZATION

MOLSA – MINISTRY OF LABOR AND SOCIAL AFFAIRS

MOFED – MINISTRY OF FINANCE AND ECONOMIC DEVELOPMENT

ERCA – ETHIOPIAN REVENUE AND CUSTOMS AUTHORITY

CSA – CENTRAL STATISTICAL AGENCY

EIA – ETHIOPIAN INVESTMENT AGENCY

GTP – GROWTH AND TRANSFORMATION POLICY

CSA- CENTRAL STATISTICAL AGENCY

Total investment required for the project is estimated to be Birr 61,077,272

After project implementation the company is expected to generate sales of Birr

2.1 PROMOTER’S PROFILE

 Founder and owner of C & E Brothers Steel Factory PLC

2.2 THE PROJECT

The project will have a combination of;

 Basement floor: parking space for 10 cars

 1st floor: two non-identical two bed room apartment flat

3.1 PRODUCT DESCRIPTION

TABLE 1: TYPES OF APARTMENTS

Apartment type Size (M2) PCS

3.2 APARTMENT DEMAND

The main derivers of the apartment are discussed as follows:

3.2.1 ECONOMIC GROWTH

The agriculture, industry, manufacturing and service sectors’ annual average

TABLE 2: PROJECTED TREND OF GDP GROWTH

IMF projection of Ethiopian GDP growth is conservative than GTP II projection.

FIGURE 1: GDP GROWTH

3.2.2 POPULATION GROWTH

FIGURE 2: POPULATION PROJECTION (IN MILLIONS)

As urbanization indicates people’s living style, it is a major factor to derive a

In Ethiopia, Urban population growth rate is projected to increase by 4% annually.

FIGURE 3: URBAN POPULATION (2015)

Male Female Total

3.2.4 POPULATION IN ADDIS ABABA

TABLE 3: POPULATION IN ADDIS ABABA

3.2.5 ECONOMICALLY ACTIVE POPULATION

In addition to the above-mentioned derivers of apartment, the size and growth of

TABLE 4: TOTAL URBAN POPULATION EMPLOYMENT (2015)

TABLE 5: ECONOMIC ACTIVITY IN ADDIS ABABA (2015)

The increase in economically active population across many sectors in urban

3.2.6 FOREIGNERS WORKING IN ETHIOPIA

FIGURE 4: EXPATRIATE EMPLOYMENT

2010/11 2011/12 2012/13 2013/14 2014/15 2015/16

Foreigners mainly employed in Ethiopia in the construction section (about 55% in

TABLE 6: FOREIGNERS EMPLOYMENT IN ETHIOPIA

As discussed above the number of foreigners employed in Ethiopia has been

apartment estimated to increase for the foreseeable future due to accommodation

3.2.7 ETHIOPIANS LIVING ABROAD

The number of Ethiopians living abroad is not known. According to MFA, it is

TABLE 7: ETHIOPIAN ASYLUM SEEKERS

According to the National Bank of Ethiopia (NBE), remittance flow to Ethiopia

Remittance transferred to the country is to meet various objective of the diaspora

3.2.8 GOVERNMENT PLAN

 housing development by associations or individuals

FIGURE 5: HOUSING UNIT CONSTRUCTION PLAN

140 Number of houses constructed by