The subject is project management

Consider Cement Project with the following information,

The initial investment outlay on the project is birr 100 million which is consists of 80 million plant and machinery and the remaining 20million is on working capital.

The entire outlay will be made at the beginning of the project

The project will be financed with 50 million of equity

capital and the reaming 50 million of debt financing

The life of the project is expected to be 5 years.

At the end of the 5th years a fixed asset will fetch a net salvage value of birr 30 million where as working capital liquidated at its book value

The project is expected to increase the revenue of the firm by 120 m per year.

The increase in cost on account of the project is expected to be 80 m per year (this includes all costs items other than depreciation and tax).

Plant and machinery will be depreciated at the rate of 25% per year as shown below

First year Second year Third year Fourth birr Fifth year

20m 15m 11.25m 8.44m 6.33m

If the effective tax percent will be 30% and interest rate is 10% , given the above information calculate the yearly cash flow of the

project