Your SlideShare is downloading. ×
0
„Car Care‟ Project feasibility study
Supervisor: Prof. Dr. Ashraf Saleh
Prepared by: Amal Azab,
Karim ElKot,
Walid Saafan
...
Topics
 Introduction
 The location study
 The legal study
 The marketing study
 The technical study
 The financial s...
Introduction
 Car-Care center is a car service center that is specialized in
providing interior and exterior car cleaning...
The location study
 The project will be located in Al Rehab city
 AlRehab service area has a good advantage of serving
r...
The legal study
 There is no legal constrains to establish the project, similar
small scale project already operating in ...
The marketing study
Target customers and market segmentation
 Geographic segmentation:
 The target customers are AlRehab...
The marketing study
Studying the potential market/ demand
 Demand Gap
• Through our market observations and testing we fi...
The marketing study
Studying the potential market/ demand, cont.,
 Throughout the observations and conducted market
surve...
The marketing study
Demand estimation/ Projection of the Market demand:
 “Car Care” services:
'Car Care' Project feasibil...
The marketing study
Demand estimation/ Projection of the Market demand, cont.,
 The estimated population of AlRehab city ...
The marketing study
Demand estimation/ Projection of the Market demand, cont.,
'Car Care' Project feasibility study, Sep.,...
The marketing study
Factors affecting the demand:
1. Estimation of demand changes due to population
changes R= 2%
2. Estim...
The marketing study
Factors affecting the demand, cont.,:
3. Estimation of demand changes due to income changes:
Xy=Ey* Δy...
The marketing study
Factors affecting the demand, cont.,:
4. Estimation of demand changes due to advertising
changes:
The ...
The marketing study
Factors affecting the demand, cont.,:
 When combining all the four Factors:
Ft= r + xy + xp + xa
'Car...
The marketing study
Factors affecting the demand, cont.,:
 We assume that there will be no sales in Y0.
'Car Care' Projec...
The technical study
Service cycle and flow chart
'Car Care' Project feasibility study, Sep.,2009
Receiving car from custom...
The technical study
Initial costs:
 Site internal preparations
Rent
The location will be rented by 8,000 LE per month.
Pa...
The technical study
Initial costs, cont.,:
Site external preparations
Advertising costs
Miscellaneous costs
Legal document...
The technical study
Operating costs:
 Operating costs:
Equipments and machines
'Car Care' Project feasibility study, Sep....
The technical study
Operating costs, cont.,:
 Raw materials costs
 Manpower structure and costs
 Rent
'Car Care' Projec...
The technical study
Operating costs, cont.,:
 Cost of funds
 Taxes
'Car Care' Project feasibility study, Sep.,2009
Cost ...
The technical study
Total yearly cash flow:
'Car Care' Project feasibility study, Sep.,2009
Year Item Cash in Cash out
Cas...
The technical study
Total yearly cash flow:
 Total aggregated income and expenditures for the project
over 5 years
'Car C...
The financial study
Source of finance
 The project „s economic life is planned to be extended to 5
years which will be ca...
The financial study
Investment profitability analysis
1. Simple rate of return – SRR
The simple rate of return is higher t...
The financial study
Investment profitability analysis, cont.,
2. Payback period – PBP
• The expected positive amount per d...
The financial study
Investment profitability analysis, cont.,
3. Net present value - NPV
Assume discount rate = 10%
NPV = ...
The financial study
Investment profitability analysis, cont.,
4. Interest Rate of Return – IRR
IRR = 27% , IRR is higher t...
The economical study
 the SRR is positive and greater than the interest rate found
in the market.
 The payback period in...
THANK YOU
'Car Care' Project feasibility study, Sep.,200931
Upcoming SlideShare
Loading in...5
×

Car care project feasibility study

8,394

Published on

Car care project feasibility study

Published in: Business, Technology
3 Comments
15 Likes
Statistics
Notes
No Downloads
Views
Total Views
8,394
On Slideshare
0
From Embeds
0
Number of Embeds
4
Actions
Shares
0
Downloads
499
Comments
3
Likes
15
Embeds 0
No embeds

No notes for slide

Transcript of "Car care project feasibility study"

  1. 1. „Car Care‟ Project feasibility study Supervisor: Prof. Dr. Ashraf Saleh Prepared by: Amal Azab, Karim ElKot, Walid Saafan Sep., 2009
  2. 2. Topics  Introduction  The location study  The legal study  The marketing study  The technical study  The financial study  The economical study  Conclusion 'Car Care' Project feasibility study, Sep.,20092
  3. 3. Introduction  Car-Care center is a car service center that is specialized in providing interior and exterior car cleaning  The following services will be offered: • Water washing, • Steam washing, • Car polishing, • Carpet cleaning, • Air condition odor cleaning • etc.. 'Car Care' Project feasibility study, Sep.,20093
  4. 4. The location study  The project will be located in Al Rehab city  AlRehab service area has a good advantage of serving residents of new Cairo.  The service area has other competitors providing low service.  The shop has the area of 100 m2. 'Car Care' Project feasibility study, Sep.,20094
  5. 5. The legal study  There is no legal constrains to establish the project, similar small scale project already operating in the city for long time without obligations.  Commercial registration documents and tax file are required. 'Car Care' Project feasibility study, Sep.,20095
  6. 6. The marketing study Target customers and market segmentation  Geographic segmentation:  The target customers are AlRehab city and the surrounding area residents.  Demographic segmentation  Middle to high income level. 'Car Care' Project feasibility study, Sep.,20096
  7. 7. The marketing study Studying the potential market/ demand  Demand Gap • Through our market observations and testing we find a demand gap > available market capacity.  The following schedule shows a simple weekly study of potential market /target demand: 'Car Care' Project feasibility study, Sep.,2009 Sun Mon Tue Wed Thu Fri Sat Total 12:00-15:00 1 1 1 1 1 3 3 11 15:00-18:00 2 2 2 2 2 6 6 22 18:00-21:00 2 2 2 2 2 8 8 26 21:00-00:00 4 4 3 3 3 6 6 29 Total 9 8 8 8 8 23 23 88 Average served card per day 12.4 7
  8. 8. The marketing study Studying the potential market/ demand, cont.,  Throughout the observations and conducted market survey, we found the following: • Long waiting time. • Unsatisfied customers with the available service. • Lack of service quality. • Lack of some services like steam washing machines. 'Car Care' Project feasibility study, Sep.,20098
  9. 9. The marketing study Demand estimation/ Projection of the Market demand:  “Car Care” services: 'Car Care' Project feasibility study, Sep.,20099 Serial Product Price 1 Inside/ outside car water wash 30 2 Motor cleaning 25 3 Sterilizing 25 4 Internal car polish 75 5 Car waxing 200 Average price 71
  10. 10. The marketing study Demand estimation/ Projection of the Market demand, cont.,  The estimated population of AlRehab city is about 25,000 families, we assume 1 person per family.  We estimate the 60% of the apartments are occupied with full residencies.  We estimated that the target customers owns 1.5 cars in average.  We estimated the each customer will request the cleaning service twice a month.  Our estimated actual target customers will be around 10% of the customer‟s pool . 'Car Care' Project feasibility study, Sep.,200910
  11. 11. The marketing study Demand estimation/ Projection of the Market demand, cont., 'Car Care' Project feasibility study, Sep.,2009 Population (n) 45,000 Sample accepted the product (d) 10% Universe (K) 4,500 Expected demand over 1st year D(t) = K * X' 319,500 11
  12. 12. The marketing study Factors affecting the demand: 1. Estimation of demand changes due to population changes R= 2% 2. Estimation of demand changes due to price changes: The price should be left constant as this is a new project. Xp=Ep*Δp Where: “Xp”: Change in demand as a result of change in price. “Ep”: the partial elasticity of price. “Δp": the % of change in relative price. 'Car Care' Project feasibility study, Sep.,200912
  13. 13. The marketing study Factors affecting the demand, cont.,: 3. Estimation of demand changes due to income changes: Xy=Ey* Δy 6%=2%*3% Where: “Xy": Change in demand as a result of change in income. “Ey”: the partial income elasticity of demand. “Δy”: the % of change in income 'Car Care' Project feasibility study, Sep.,200913
  14. 14. The marketing study Factors affecting the demand, cont.,: 4. Estimation of demand changes due to advertising changes: The Number of people attracted due to advertising will decrease as time passes. Xa= Ea. ∆a. bt 'Car Care' Project feasibility study, Sep.,2009 Years Xa= Ea *∆a * bt Xa Y1 1.5%*2%*1% 3% Y2 1.5%*2%*0.6% 1.80% Y3 1.5%*2%*0.4% 1.20% Y4 1.5%*2%*0.2% 0.60% Y5 1.5%*2%*0.1% 0.30% “Xa”: is the expected growth rate of demand caused by % change in advertising. “Ea”: is the partial elasticity of advertising. “Δa”: is the change in advertising spending. “bt”: is the arbitrary factor that measures the change in sales caused by advertising over time. 14
  15. 15. The marketing study Factors affecting the demand, cont.,:  When combining all the four Factors: Ft= r + xy + xp + xa 'Car Care' Project feasibility study, Sep.,2009 Ft R+xy+xp+xa % Ft1 2%+6%+0+3% 11% Ft2 2%+6%+0+1.8% 9.80% Ft3 2%+6%+0+1.2% 9.20% Ft4 2%+6%+0+0.6% 8.60% Ft5 2%+6%+0+0.3% 8.30% R: rate of growth of population. Xp: percentage changes in demand caused by change in relative prices. Xy: expected growth rate of demand caused by change in per capita income. Xa: expected growth rate of demand caused by advertising spending. 15
  16. 16. The marketing study Factors affecting the demand, cont.,:  We assume that there will be no sales in Y0. 'Car Care' Project feasibility study, Sep.,2009 Years Ft Dt+1=Dt*(1+Ft) Y0 0% 319,500 Y1 11% 354,645 Y2 9.80% 389,400 Y3 9.20% 425,225 Y4 8.60% 461,794 Y5 8.30% 500,123 16
  17. 17. The technical study Service cycle and flow chart 'Car Care' Project feasibility study, Sep.,2009 Receiving car from customer 2.Car washing (inside/ outside), 20min 1.Motor washing, 10min 3. Sterilization and remove air condition odors, 10min 4. Car polishing (inside/ outside), 30min 5. Finishing 5. Waxing the car, 30min 17
  18. 18. The technical study Initial costs:  Site internal preparations Rent The location will be rented by 8,000 LE per month. Payment of 3 months in advance = 3 * 8,000 = 24,000 LE. Construction costs: 'Car Care' Project feasibility study, Sep.,2009 Item Cost Floor preperations 10,000 Wall painting and preperations 4,000 Electricity preperations 3,000 Others 5,000 Total 22,000 18
  19. 19. The technical study Initial costs, cont.,: Site external preparations Advertising costs Miscellaneous costs Legal documents: 'Car Care' Project feasibility study, Sep.,2009 Item Cost Singage 3,000 Lights 1,000 Total 4,000 Item Price 10000 colored Flyers 2,000 Big Banners at the Entrance of AlRehab city 2,000 Total 4,000 Item Price Fire equipments 1,000 Workers uniform 1,000 Miscellanous 1,500 Total 3,500 Item Cost Commercial registration and tax card & licence 7,000 others 500 Total 7,500 Total initial expense for Y0 254,580 19
  20. 20. The technical study Operating costs:  Operating costs: Equipments and machines 'Car Care' Project feasibility study, Sep.,2009 Serial Item Unit price Quantity Total price 1 Machine wash in cold water high pressure 5000 1 5,000 2 Steam washing machine 30000 1 30,000 3 Vacuum cleaner 3000 1 3,000 4 Disks washing and polishing 500 1 500 5 Air compressor 4000 1 4,000 42,500Total 20
  21. 21. The technical study Operating costs, cont.,:  Raw materials costs  Manpower structure and costs  Rent 'Car Care' Project feasibility study, Sep.,2009 Serial Job description Quantity Cost Total cost 1 Supervisor (1500 LE) 1 18000 18,000 2 Skilled worker (750 LE) 1 9000 9,000 3 Worker (500LE) 2 6000 12,000 4 Social insurance 4 360 1,440 Total cost 40,440 Rent (8000LE per month) 96,000 21 Raw materials costs Serial Item Unit price Quantity Total price 1 Polishing (litre) 290 60 17,400 2 Cleaning sprays (interior) 25 120 3,000 3 Wax 40 36 1,440 21,840Total
  22. 22. The technical study Operating costs, cont.,:  Cost of funds  Taxes 'Car Care' Project feasibility study, Sep.,2009 Cost of funds Bank loan 260K over 5 years 11% Principal 260,000 interst rate (annual) 11% Interst amount (annual) 28,600 Duration (years) 5 Total interst 143,000 Administrative fees (1.5%) 3,900 Total 406,900 The loan will be amotrized 6,782 per month Cost of funds 81,380 per year Year Gross profit Tax (18%) 2009 (254,580) - 2010 90,237 16,243 2011 108,880 19,598 2012 127,061 22,871 2013 144,302 25,974 2014 185,456 33,382 22
  23. 23. The technical study Total yearly cash flow: 'Car Care' Project feasibility study, Sep.,2009 Year Item Cash in Cash out Cashin 354,645 Rent (+10%) 105,600 Salaries (+10%) 40,440 Raw materials (+5%) 22,932 Utilities (+2%) 13,056 Miscellaneous 1,000 Cost of funds 81,380 Net 354,645 264,408 1 Year Item Cash in Cash out Cashin 389,400 Rent (+10%) 116,160 Salaries (+10%) 44,484 Raw materials (+5%) 24,079 Utilities (+2%) 13,317 Miscellaneous (+10%) 1,100 Cost of funds 81,380 Net 389,400 280,520 2 Year Item Cash in Cash out Cashin 425,225 Rent (+10%) 127,776 Salaries (+10%) 48,932 Raw materials (+5%) 25,283 Utilities (+2%) 13,583 Miscellaneous (+10%) 1,210 Cost of funds 81,380 Net 425,225 298,164 3 Year Item Cash in Cash out Cashin 461,794 Rent (+10%) 140,554 Salaries (+10%) 53,826 Raw materials (+5%) 26,547 Utilities (+2%) 13,855 Miscellaneous (+10%) 1,331 Cost of funds 81,380 Net 461,794 317,492 4 Year Item Cash in Cash out Cash in 500,123 Rent (+10%) 154,609 Salaries (+10%) 59,208 Raw materials (+5%) 27,874 Utilities (+2%) 14,132 Miscellaneous (+10%) 1,464 Rent advance payment 24,000 Cost of funds 81,380 Net 524,123 338,667 5 23
  24. 24. The technical study Total yearly cash flow:  Total aggregated income and expenditures for the project over 5 years 'Car Care' Project feasibility study, Sep.,2009 Year Cash-in Cash-out Gross profit Tax (18%) Net profit 2009 0 254,580 (254,580) (254,580) 2010 354,645 264,408 90,237 16,243 73,994 2011 389,400 280,520 108,880 19,598 89,282 2012 425,225 298,164 127,061 22,871 104,190 2013 461,794 317,492 144,302 25,974 118,328 2014 524,123 338,667 185,456 33,382 152,074 24
  25. 25. The financial study Source of finance  The project „s economic life is planned to be extended to 5 years which will be categorized as a long term project so We will seek CIB bank for a long term loan over 5 years period amounting to 260,000 LE with annual interest rate of 11% and bank administration fees of 1.5%. 'Car Care' Project feasibility study, Sep.,2009 Cost of funds Bank loan 260K over 5 years 11% Principal 260,000 interst rate (annual) 11% Interst amount (annual) 28,600 Duration (years) 5 Total interst 143,000 Administrative fees (1.5%) 3,900 Total 406,900 The loan will be amotrized 6,782 per month Cost of funds 81,380 per year 25
  26. 26. The financial study Investment profitability analysis 1. Simple rate of return – SRR The simple rate of return is higher than the interest rate in the market which is acceptable. 'Car Care' Project feasibility study, Sep.,2009 𝑅 = 𝐶𝑎𝑠ℎ 𝑖𝑛 − 𝑐𝑎𝑠ℎ 𝑜𝑢𝑡 + 𝑦 ∗ 100% 𝐼𝑛𝑖𝑡𝑖𝑎𝑙 𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 R0 = ( 0-254580 ) / 254580 (100.0) R1 = ( 354645-264408+28600 ) / 254580 46.7 R2 = ( 389400-280519+28600 ) / 254580 54.0 R3 = ( 425225-298164+28600 ) / 254580 61.1 R4 = ( 461794-317492+28600 ) / 254580 67.9 R5 = ( 524123-338667+28600 ) / 254580 84.1 26 Where R is the simple rate of return, y is the cost of fund. Y is the bank interest
  27. 27. The financial study Investment profitability analysis, cont., 2. Payback period – PBP • The expected positive amount per day at the 3rd year = Cash out of the 3rd year divided by 360 = 828.23 • Remaining period = initial investment divided by expected positive amount per day The payback period is 2 year and 10 months which is acceptable. 'Car Care' Project feasibility study, Sep.,2009 Year Cash-in Cash-out Net profit accumulated 2009 0 254,580 (254,580) (254,580) 2010 354,645 264,408 73,994 (180,586) 2011 389,400 280,520 89,282 (91,304) 2012 425,225 298,164 104,190 12,886 2013 461,794 317,492 118,328 131,214 2014 524,123 338,667 152,074 283,288 27
  28. 28. The financial study Investment profitability analysis, cont., 3. Net present value - NPV Assume discount rate = 10% NPV = 128,214 , NPV is positive which is acceptable 'Car Care' Project feasibility study, Sep.,2009 Year Cash-in Cash-out Gross profit Tax (18%) Net profit 2009 0 254,580 (254,580) (254,580) 2010 354,645 264,408 90,237 16,243 73,994 2011 389,400 280,520 108,880 19,598 89,282 2012 425,225 298,164 127,061 22,871 104,190 2013 461,794 317,492 144,302 25,974 118,328 2014 524,123 338,667 185,456 33,382 152,074 NPV = 254,580 + 73,994 1.1 + 89,282 1.12 + 104,190 1.13 + 118,328 1.14 + 152,074 1.15 28
  29. 29. The financial study Investment profitability analysis, cont., 4. Interest Rate of Return – IRR IRR = 27% , IRR is higher than the interest rate in the market which is acceptable. 'Car Care' Project feasibility study, Sep.,2009 0 = 254,580 + 73,994 (1 + 𝑟) + 89,282 (1 + 𝑟)2 + 104,190 (1 + 𝑟)3 + 118,328 (1 + 𝑟)4 + 152,074 (1 + 𝑟)5 29
  30. 30. The economical study  the SRR is positive and greater than the interest rate found in the market.  The payback period in the financial study is somewhere between the second and third year,  The NET PRESENT VALUE is positive, which implies the feasibility of the project.  The IRR ratio is equal to 27% which is higher than the interest rate present in the market.  The project is acceptable and feasible. 'Car Care' Project feasibility study, Sep.,200930
  31. 31. THANK YOU 'Car Care' Project feasibility study, Sep.,200931
  1. A particular slide catching your eye?

    Clipping is a handy way to collect important slides you want to go back to later.

×