Since you are a mechanical Engineer, suppose that you decided to establish a Typical Automobile maintenance center:
Question:
Since you are a mechanical Engineer, suppose that you decided to establish a Typical Automobile maintenance center:
Any missing information please suggest it from your own
the following data is an assumption from me.
for more info I will add the original question below (but please neglect it)
The project life considered to be 10 years since the automobiles lifecycle is around 10 years and after the 10 years all the equipment of the maintenance center should be updated (new update project needed)
# | Type of expense | Amount |
1 | Establishment cost | 100,000$ |
2 | Premises rent | 40,000$ |
3 | Operation cost | 15,285$ |
4 | Maintenance for equipment cost | 3,500$ |
5 | Salaries | 68,571$ |
6 | Administration cost (Tax, Registration, …etc) | 10,000$ |
7 | Overhead | 7,000$ |
The total cost of the project will be 244,356$
100,000$ will be the initial cost payed once at the beginning of the project (year 0)
The other costs will be 144,356$ paid annually along the project life cycle
The other costs is expected to increase by 2% annually
The e expected revenue for the project is 170,340$ annually and expected to increase by 3% annually since the automobiles will need more repairs when it becomes older
The salvage value for the project will be 20,000$
If needed suggest according to your mind a reasonable interest rate, discounted interest rate, or any other variables.
Calculate the Rate of return for the project show your work in details the original question as follow (neglect it):
Imagine that you own (250,000$) and you want to invest it in your dream plan. You have to consider two different alternatives. For each alternative, estimate the initial cost and annual cash flow details (operation and maintenance costs, raw material, salaries, overheads…etc.). Then compare these alternatives based on ROR criteria.