Contents List

Abstract and Introduction........................................3

Initial Data..............................................................4
Calculations.............................................................6
Cash Flow................................................................10
Present Worth Analysis............................................11
Conclusion...............................................................14

ABSTRACT

3
We as economic analysts are evaluating thefeasibility of
establishing a new company. B-Safe is a company focusing
on the aviation safety belt industry. We are going to
calculate if this business plan of ours can be accepted or
not. We will use the Present Worth method to conduct our
analysis.

B-SAFE
Introduction
B-Safe is a company aspiring to launch itself as an aircraft
seatbelts manufacturer. They possess a unique ambition to be the
first provider of seatbelt airbag systems and a range of other
safety restraint products for the aerospace industry. They want to
be one of the most advanced companies for aviation safety in the
world.
They intend to manufacture products used in both commercial and
general aviation, in civilian applications, and that can be found in
automotive child seats too. Protecting passengers is a priority to BSafe and hopefully their products should help move millions of
people and countless tons of cargo safely and securely in the air
and on the ground. These are some of their potential products:

Seatbelt Airbag System

Cargo Containment Solutions
Child Seat Restraints
Aviation Passenger & Crew Restraints
Aircraft Interior Safety

B-Safe is focused and committed to providing quality products

and timely, cost-effective solutions to customers worldwide.

Initial Data
Cost
Capital Investment = $80,000,000

Utilities
Name
Electricity
Water

Unit
KWh
Cm^3

Consumption/Hr
300
1667

Cost/ Unit
$0.12
$0.001

Unit
Hour
Hour
Hour
Hour

Consumption/Hr
10
12
12
24

Cost/ Unit
$150
$20
$70
$15

Consumption/Mont
h
10
10
5000
100000
5

Cost/Unit

Consumption/Year
5

Cost/unit
$20000
$30000

Escalations = 5%

Operations
Name
Scientist
Worker
Engineers
Securities

Raw Materials
Names

Unit

Aluminium
Steel
Nylon
Nitrogen
Polyesters

Ton
Ton
Kg
Lt
Ton

$1800
$480
$3.5
$10
$470

Escalations: 1.5%

Miscellaneous
Names
Maintenance
Fuel of
Transportation

Unit
Machine

5
Revenues
Marginal
Cost
Airframe Barrier Nets/net
Seatbelt Airbags/seat
Child Aviation Restraints
System- CARES
Crew Restraints
Lightweight Seatbelt
Commercial Passenger
Restraint
Business Jet Restraint
Rotorcraft Jet Restraint
Ground Vehicle Restraint
Interior Products
Baby Bassinet
Child Seats

Marginal
Revenue

Expected
Revenue

Product

$700
$350

$1,500
$800

$1,200,000
$4,800,000

800
6000

$250
$200
$300

$800
$500
$700

$1,800,000
$2,000,000
$2,800,000

2250
4000
4000

$200
$400

$600
$800

$4,200,000
$6,000,000

7000
7500

$300
$250

$600
$500

$2,400,000
$2,200,000

4000
4400

$600
$700

$1,000
$1,200

$500,000
$1,200,000

500
1000

6
Calculations
Cost
Utilities
Escalations = 5%

Electricity:
Consumption per hour

= 300 kWh

Consumption per year

= 300*24*265
=2,628,000 kWh

Cost per unit

= $0.12

Total Cost per Year

= $315,360

Water:
Consumption per hour

= 1667 cm^3

Consumption per year

= 1667*24*365
= 14602920 cm^3

Cost per unit

= $0.001

Total Cost per Year

= $14,602

Operations
Scientist (5 People):
Works per day

= 10 Hours

1 Week

= 5 Days of work = 50 Hours

1Year

= 50* 52 = 2600 Hours

Cost per Person

= $150

Total Cost per Year for 1 Scientist

= $390,000

Total Cost per Year for 5 Scientist

=$1,950,000

7
Workers (20 People):
Works per day

= 12 Hours

1 Week

= 6 Days of work = 72 Hours

1Year

= 72* 52 = 3744 Hours

Cost per Person

= $20

Total Cost per Year for 1 Worker

= $74880

Total Cost per Year for 20 Worker

=$1,497,600

Engineers (10 People):

Works per day

= 12 Hours

1 Week

= 5 Days of work = 60 Hours

1Year

= 60* 52 = 3120 Hours

Cost per Person

= $70

Total Cost per Year for 1 Engineers

= $218,400

Total Cost per Year for 10 Engineers

=$2,184,000

Securities (5 People):
Works per day

= 24 Hours

1 Week

= 7 Days of work = 168 Hours

1Year

= 168* 52 = 8736 Hours

Cost per Person

= $15

Total Cost per Year for 1 Security Guard

Total Cost per Year for 5 Security Guards

Raw Materials
Aluminium:
Consumption per Month
Consumption per year
Cost per unit

= 40 Ton
= 120 Ton
= $1800

= $131,040
=$655,200

Total Cost per Year

= $864,000

Steel:
Consumption per Month

= 100 Ton

Consumption per year

= 120 Ton

Cost per unit

= $480

Total Cost per Year

= $576,000

Nylons:
Consumption per Month

= 5000 kg

Consumption per year

= 60000 kg

Cost per unit

= $3.5

Total Cost per Year

= $210,000

Nitrogen:
Consumption per Month

= 4000 Lt

Consumption per year

= 48000 Lt

Cost per unit

= $10

Total Cost per Year

= $480,000

Polyesters:
Consumption per Month
Consumption per year

= 5 Ton
= 60 Ton

Cost per unit

= $470

Total Cost per Year

= $28,200

9
Miscellaneous
Maintenance:
Consumption per year

= 5 machine

Cost per unit

= $20000

Total Cost per Year

= $100000

Fuel of Transportations:
Total Cost per Year

=$30000

Escalations =1.5%
Annual Cost per Year = $8,904,962

Revenue
Marginal
Cost
Airframe Barrier
Nets/net
Seatbelt
Airbags/seat
Child Aviation
Restraints SystemCARES
Crew Restraints
Lightweight Seatbelt
Commercial
Passenger Restraint
Business Jet
Restraint
Rotorcraft Jet
Restraint
Ground Vehicle
Restraint
Interior Products
Baby Bassinet
Child Seats

Marginal
Revenue

Expected
Revenue

Product

$700

$1,500

$1,200,000

800

$350

$800

$4,800,000

6000

$250
$200
$300

$800
$500
$700

$1,800,000
$2,000,000
$2,800,000

2250
4000
4000

$200

$600

$4,200,000

7000

$400

$800

$6,000,000

7500

$300

$600

$2,400,000

4000

$250

$500

$2,200,000

4400

$600
$700

$1,000
$1,200

$500,000
$1,200,000

500
1000

10

Total Revenue per Year: $29,700,000

Cash flow

11
Present Worth of Costs
Annual Cost of Raw materials
Polyesters]

= Annual cost of [Aluminium + Steel + Nylon + Nitrogen +

= $864,000 + $576,000 + $210,000 + $480,000 + $28,200

= $2,158,200
MARR

= 20%

Inflation

= 1.5%

MARR f

=i +f +if

= 20 + 1.5 + .3
= 21.8%
Present worth of Raw materials = $2,158,200 (P/A, 21.8%, 20)
= $2,158,200(4.4983)
= $9,708,231.06
Annual Cost of Utilities

= Annual cost of [Electricity + Water]

= $315,360 + $14,602
= $329,962
MARR

= 20%

Inflation

= 5%

MARR f

= i +f +if

= 20 + 5 + 1
= 26%
Present worth of Utilities = $329,962 (P/A, 26%, 20)
= $329,962(3.8083)
= $1,256,608.49
Annual Operational Costs = Annual cost of [Scientists, Engineers, Workers, Security]

= $1,950,000 + $2,184,000 + $1,497,600 + $655,200

12

= $6,286,800
MARR

= 20%

Inflation

= 0.5%

MARR f

= i +f +if

= 20 + 0.5 +0.1
= 20.6%
Present worth of Operational Costs

= $6,286,800 (P/A, 20.6%, 20)

= $6,286,800(4.8544)
= $30,518,641.92
Annual Miscellaneous Costs

= Annual cost of [Machine maintenance, Transportation]

= $100,000 + $30,000
= $130,000
MARR

= 20%

Inflation

= 1.5%

MARR f

= i +f +if

= 20 + 1.5 +0.3
= 21.8%
Present worth of Miscellaneous Costs

= $130,000 (P/A, 21.8%, 20)

= $130,000(4.4983)
= $584,779
Present Worth of Total Costs
$30,518,641.92 + $584,779
= $122,068,260.50

= $80,000,000+ $9,708,231.06 + $1,256,608.49 +

13
Present Worth of Revenues
Annual Revenue from all the products = $29,700,000
MARR

= 20%

Inflation

= 1.5%

MARR f

= i +f +if

= 20 + 1.5 +0.3
= 21.8%
Present worth of Revenues

= $29,700,000 (P/A, 21.8%, 20)

= $29,700,000(4.4983)
= $133,599,510

Net Present worth

Net Present Worth

= Present Worth of Revenues - Present Worth of Costs

= $133,599,510 - $122,068,260.50
= $11,531,249.50

14
Conclusion
So, after doing the analysis, we come to a conclusion that they should do
this investment on making a new company. This statement also being
strongly supported by the positive result of the net present worth. This
positive result means that the project is acceptable and if they do this
project, hopefully they will success and get good profits.