You have project which requires incomes and outflows of money. You are asked to detail all of this
money on timelines and value the funds at the beginning of the project.
Assume an interest rate of 5% c.m for the NPV calculation. The entire
project is over 1 year. Show FULL details at every time point where
there is a money event occurring.
Outgoing funds: (Expenses)
1) Re-Paying back the face value of a $1,000,000 bond repayable 1 year from the start of the
2) Paying interest coupons quarterly at 4% c.q
3) Salaries of staff of $12,000 payable each Month
4) Office expenses of $8,000 payable each Month
5) Loan payments on a loan of $200,000 at 2% c.q. paid quarterly to be repaid in full in 1 years
6) Initial start up expenses for building and equipment of $300,000
Incoming Funds (Revenues)
1) $1,000,000 bond from investors (referred to it 1) above)
2) $200,000 loan from bank (referred to in 5) above)
3) Revenue from product at $40,000 each month for 1 year
Your project Document for Hand-In needs to include:
Make sure to have all documents in PDF format
a) A detailed time line of all of the Outgoing funds and Incoming Funds. Use different Colors or
styles to distinguish them (Or use outgoing above the line and Incoming below the line). Make
Time line readable . Show every month and quarter and yearly values clearly. Use landscape
orientation to allow for more room. You make use … notation where repetitions occur
There are 9 Funds in all (6 outgoing 3 incoming). Each properly labelled Fund on time Line
counts for 4 marks. There is an additional 4 marks for overall Format as demonstrated in the
Course. Funds must be clearly labelled showing all relevant Dates. Annuities must be clearly
labelled and show individual payments. Use arrows to indicate where funds are being valued.
b) Determine the Net Present Value of the Project at time 0. Use 5% c.m for this valuation.
Show details of the fund. Show the value as Incoming funds minus the outgoing funds using
present values of all. Show complete details of all calculations. On a separate page from the
detailed timeline, clearly Show the value of EACH fund and the corresponding Equation detailing
than the value of the fund is determined. Each Fund value and Equation counts for a total of 4
marks . There is an additional 4 marks given for computing the overall value of the incoming
and outgoing funds. Also Show equations relating to these totals.
c) COMMENT on the value of the project from a financial point of view in a typed executive
report. Add suggestions as to how the financial aspect of the project could be improved.
Support your comments Based on Your findings from parts a) and b).