Here is a simple project, with draft costs and terms.

Objective: Implement points 1-6 in the model below.

At this stage, all the assumptions are uncertain, so model must be able to be changed easily. Assume cash flows happen at the start of each year.

1 Revenue: Foreign currency 12M per annum from year 4 and onwards

2 Monthly costs once revenue is being earned: 100,000 labour, 250,000 services per month (local currency)

3 Create inputs for capital expenditure year 1: 5m, year 2: 2.5m, year 3: 2.0m. total 9.5m

4 One-off costs: year 3 handover fee 350,000, year 3 success fee 500,000.

5 Exchange rate assumed Foreign currency/Local currency 1.60

ie FC 1.6 = LC 1.00

6 Work out the Project (before financing) NPV using a cost of capital of 15% and IRR. Give you answer on the NPV and IRR in the workings below.

7 Given only this information, would you invest?

Create a simple 10-year cash flow calculation which uses each of the inputs

Must be able to change each input by altering a single cell only

All workings must be on this worksheet. Do not create any extra worksheets

All monetary figures are in local currency 000s unless specified

INPUTS AREA (expand as needed) Revenue Opex CapEx One off costs Handover fee Success fee FX Foreign to Local Cost of capital

CASH FLOW SCHEDULE:

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Currency:

Revenue Foreign F 12 F 12 F 12 F 12 F 12 F 12 F 12

Revenue Local

Capital Expenditure Local

Monthly Costs Local

Handover Fee Local

Success Fee Local

Cash Flow Before Financing

NPV

IRR