=FINANCIAL ASPECT

The Financial aspect of the project feasibility study

measures the results of the marketing, technical, and management
of the project study and expresses in peso terms the possible
outcome of operating the project.

Statement of the major assumptions, the Projected Financial

Statements, the details of the figures presented, and the
analysis of such financial projections are the major components
of the financial study.

Source of Capital

The capital is to be provided by the proponent owner, Mr.

Fernando Taverna in the amount of P50, 000, 000. 00. This will come

from the personal savings of the proponent owner and from his

different sources of income.

Major Assumptions

1. Sales Price is inclusive of 12% VAT, and is increased by 5%

annually.
2. Sales are made evenly throughout the year.
3. Cost of direct materials and expenses increase by 10% per
year.
4. Depreciation method is the straight line method.
5. All equipment has a useful life of 10 years. Building has a
useful life of 20 years. Residual Value is equivalent to
10% of their acquisition cost.
6. The purchase of the new equipment will be made after the
end of the useful life of the old equipment.
7. The daily salary increases by 10% every year.
8. Utilities expense is paid as it comes due.
9. VAT Payable is paid every 22nd of the following month.
10. The establishment uses the periodic inventory method.
11. Supplies Expense increases by 10% each year.
12. Taxes are paid quarterly.
13. Advertising Expense is 1% of Net Sales.
14. Repairs & Maintenance is 1% of Net Sales.
15. The custom tax for importing the machines is Php 700,000
based on the tariff rate of 7% (best estimate).
16. 20% of the visits were considered in the computation of the
actual sales instead of 100% as an allowance.
17. 2% is the assumed annual rate for the inventory token loss.
18. The establishment makes a budget of Php 200,000 for the
prizes inventory.
I. Financial Statements

Table 42

A. Income Statement
 Table 43

B. Statement of Cash Flows

 /Table 44

C. Balance Sheet

a
 Table 45

II. Financial Ratios

A.

B. Payback Period

The analysis using this stool evaluates how long the

initial cost investment is to be realized based on the cash

inflow projected by the project to be provided by the proponent

owner, Mr. Fernando Taverna.

Computation:

PP= Initial Cost of Investment / Annual Cash Inflow

= P 50, 000, 000 / P 48,055,103.93(First Year Inflow)

= 1.040472206 % X 12 months = 1 year 5 months and 25 days

(approximately)
 C. Breakeven Point

The evaluation of the Breakeven point helps in

identifying what part or level of Sales in a year will there be
no incurrence of Loss nor gain.
Table 46
Breakeven Point

2020 2021 2022 2023 2024

Contribution 403,911,298.34 424,094,265.74 445,286,819.58 467,537,906.85 490,900,341.84
Margin
CM Ratio 97% 97% 97% 97% 97%
Fixed Cost 22,593,951.64 23,530,272.88 25,647,948.86 27,982,206.58 30,547,956.58
Break-even 23,298,133.18 24,264,357.31 26,448,821.60 28,856,785.93 31,503,656.00

D. Net Present Value

This analysis tool helps the researcher affirm the

economic feasibility of the proposed subject. This analysis shows

if a business outcome is favorable or unfavorable through the use

of the time value of money.

 Table 47

Net Present Value

Net Present Values of Cash Flows

Year Cash Flow (operating) Pv of 1 (10%) PV of Cash Flow

2020 48,055,103.93 0.90909 43,686,414.43
2021 44,147,630.54 0.82645 36,485,809.26
2022 45,531,764.63 0.75131 34,208,470.09
2023 47,003,744.81 0.68301 32,104,027.74
2024 48,465,154.55 0.62092 30,092,983.76
Building RV 2682005.341 0.62092 1,665,310.76
Machines RV 688705.678 0.62092 427,631.13
Furniture & Fix. RV 2692.659 0.62092 1,671.93
Auxiliary Equipment 138540.06 0.62092 86,022.29
Service Equipment 11457.36 0.62092 7,114.10
Total Book Value of
Cash inflows after 5 236,726,799.56 178,765,455.49
years
Initial Investment 50,000,000.00
Net Present Value 128,765,455.49
after 5 years
 Schedules

Schedule 1

Sales

2020 2021 2022 2023 2024

Sales from Package 43,764,133.63 45,952,340.31 48,249,957.32 50,662,455.19 53,195,577.95
Sales from individual 39,289,241.69 41,253,703.77 43,316,388.96 45,482,208.41 47,756,318.83
purchase
Sales from 246,610.20 258,940.71 271,887.75 285,482.14 299,756.24
Redemption
machines
Total 83,299,985.52 87,464,984.79 91,838,234.03 96,430,145.73 101,251,653.02

Schedule 2

VAT Payable

Schedule 3

Cost of Electricity
 Schedule 4

Total Income in 2020

Schedule 5

Annual Salaries Expense

 Schedule 6

Annual Professional Service Fee

Schedule 7

SSS Annual Contribution

 Schedule 8

PhilHealth Annual Contribution

 Schedule 9

Pag-Ibig Annual Contribution

Schedule 10

Utilities Expenses
 Schedule 11

Arcade Machines Depreciation

Schedule 12

Building Depreciation

Building Cost Salvage Value Depreciable Useful Annual

Cost Life Depreciation
26,820,053.41 2,682,005.34 24,138,048.07 20.00 1,206,902.40

Schedule 13

Furniture and Fixtures Depreciation

Furniture and Salvage Depreciable Useful Annual

Fixtures Value Cost Life Depreciation
26,926.59 2,692.66 24,233.93 10.00 2,423.39
 Schedule 14

Auxiliary Equipment Depreciation

Auxiliary Salvage Depreciable Useful Annual

Equipment Value Cost Life Depreciation
1,385,400.60 138,540.06 1,246,860.54 10 124,686.05

Schedule 15

Service Equipment Depreciation

Service Salvage Depreciable Useful Annual

Equipment Value Cost Life Depreciation
114,573.60 11,457.36 103,116.24 10.00 10,311.62

Schedule 16

Advertising Expense

Strategy Qty Cost per Piece Total Cost

Flyers 3000 pcs Php 1.00/ pc 3,000.00
Tarpaulin 3 pc 20 Php 15.00/ sqft 900.00
sqft
Mobile 15 650/per day 9,750.00
Advertisement
Radio Advertisement 14 times 3,200 /per thirty 44,800.00
seconds
Total 58,450.00

*years 2020-2021’s advertising expense is 1% of Net Sales

 Schedule 17

Supplies Expense

Total Supplies
Roller Skating 289,193.48
Rink
Laser Tag 4,984,550.00
Building Supplies 1558.75
Total 5,275,302.23

Year 2020 2021 2022 2023 2024

Supplies Expense 263,765.11 290,141.62 319,155.78 351,071.36 386,178.50

*Supplies expense for the first years is 5% of total supplies

*Supplies expense for the succeeding years is increased by 10%

of the previous year.

Schedule 18

Uniform Expense

Employees Number per shifts Polo Total

shifts Price Cost
Cashier 2 2 350 1,400
Technician 2 2 350 1,400
Operator 7 2 350 4,900
Maintenance 8 2 350 5,600
Security 2 2 350 1,400
Total Uniform 14,700
Expense

2020 2021 2022 2023 2024

Uniform Expense 14,700.00 16,170.00 17,787.00 19,565.70 21,522.27

*Expense for the succeeding years increased by 10% of the

previous year.
 Schedule 19

Electrician Compensation

No. of work Compensation per No. of Total

days Day Electricians
730 500 2 730,000.00

Schedule 20

Training Expense

No. of Allocated No. of Total

employees training Shifts
expense per
employee
12 2,000.00 2 48,000.00