Car Website Project

Feasibility study?
A feasibility study is an analysis of the viability of an idea
through a disciplined and documented process of thinking
through the idea from its logical beginning to its logical end.
Feasibility study is carried out in order to assess the viability
of a new project
It is primary and most important thing in development of a
project

Reasons to do this Study

Gives focus to the project.

Narrows the business alternatives.
Identifies new opportunities.
Identifies reasons not to proceed.
Provides valuable information for go/no go decision.
Increases probability of business success by identifying
weaknesses early.
Provides documentation that the idea was thoroughly
investigated.

Types of Feasibility
Market Feasibility

Financial/Economic Feasibility
Organizational/Managerial Feasibility

Environmental feasibility
Legal feasibility

Feasibility Report
A feasibility report is the results of a feasibility
study. This report details whether or not a project
should be undertaken and the reasons for that
decision.

Report Content
1.
2.
3.
4.
5.
6.
7.

Introduction/Executive Summary
Background
outline of project
Methodology/method of analysis
Overview of alternatives
Conclusion
Recommendation

Launching of a Car Customization Website

www.tailormadecars.com

How Do we Work?
Select the car of your choice
Choose the variant (if any)
Body Customization options
Vinyl & Graphics
Performance Upgrades (if applicable)
Save and notify

Trends and Future prospects

The IT sector has contributed considerably to changing Indias image from a
slow developing economy to a global player
According to IBEF, IT industry is set to touch 225$ billion by 2020
IT workforce will touch 30 million by 2020, becoming the highest sector
employer
Reasons for growth among people:
Lifestyle of consumers
Affordability
Socialisation

Meeting unfulfilled need

Innovation and Up gradation It will be one of the most
important requirement for any car buyer and user

Preferences
Hardware specifications and product features
Brand name
Price
Value added services

The marketing study

Demand estimation/ Projection of the Market demand

Serial

Product

Price

Wheel

10,000

Front Bumper

12,000

Rear Bumper

12,000

Sides

7000

Front Lights

10,000

Rear Lights

4000

Tinted Glass

20,000

Body Colour

75,000

Average Price

18,750

The marketing study

Demand estimation/ Projection of the Market
demand
The estimated population is about 25,000 families
We estimated that the target customers owns 1 car in
average
Our estimated actual target customers will be around 10% of
the customers pool

The marketing study

Demand estimation/ Projection of the Market

demand
Population (n)

20,000

Sample accepted the concept (d)

5%

Universe (k)

1,000

Expected demand over 1st year

D(t)= K*X

1000*18750
= 1,87,50,000

Technical Study
Initial Costs
Site internal preparations
Rent
The location will be rented by 8,000 per month.
Payment of 3 months in advance = 3 * 8,000 = 24,000
Construction costs:
Item
Floor preperations
Wall painting and preperations
Electricity preperations
Others
Total

Cost
10,000
4,000
3,000
5,000
22,000

Site
external preparations

Advertising costs

Miscellaneous costs

Legal documents

Item
Singage
Lights
Total

Cost
3,000
1,000
4,000

Item
1000 coloured Flyers
Big Banners
Total

Price
2,000
2,000
4,000

Item
Fire equipments
Workers uniform
Miscellanous
Total

Price
1,000
1,000
1,500
3,500

Item
Cost
Commercial registration and tax card & licence
7,000
others
500
Total
7,500

Total initial expense for Y0

254,580

 Manpower structure and costs

Serial
1
2
3
4
Total cost

Job description
Supervisor (1500 LE)
Skilled worker (750 LE)
Worker (500LE)
Social insurance

Quantity

Cost
1
1
2
4

18000
9000
6000
360

Total cost
18,000
9,000
12,000
1,440
40,440

Cost of funds

Taxes

Cost of funds
Bank loan 260K over 5 years 11%
Principal
interst rate (annual)
Interst amount (annual)
Duration (years)
Total interst
Administrative fees (1.5%)
Total
The loan will be amotrized
Cost of funds

260,000
11%
28,600
5
143,000
3,900
406,900
6,782 per month
81,380 per year

Year

Gross Profit

Tax (18%)

2014

(254,580)

2015

90,237

16,243

2016

108,880

19,598

2017

127,061

22,871

2018

144,302

25,974

2019

185,456

33,382

The financial study

Source of finance
The project s economic life is planned to be extended to 5 years which will be categorized as
a long term project so We will seek a bank for a long term loan over 5 years period
amounting to 260,000 with annual interest rate of 11% and bank administration fees of 1.5%.
Cost of funds
Bank loan 260K over 5 years 11%
Principal
interst rate (annual)
Interst amount (annual)
Duration (years)
Total interst
Administrative fees (1.5%)
Total
The loan will be amotrized
Cost of funds

260,000
11%
28,600
5
143,000
3,900
406,900
6,782 per month
81,380 per year

Total yearly Cash flow

Year
1

Year
2

Year
3

Item
Cash in
Rent (+10%)
Salaries (+10%)
Raw materials (+5%)
Utilities (+2%)
Miscellaneous
Cost of funds
Net

Cash in
Cash out
354,645
105,600
40,440
22,932
13,056
1,000
81,380
354,645
264,408

Item
Cash in
Rent (+10%)
Salaries (+10%)
Raw materials (+5%)
Utilities (+2%)
Miscellaneous (+10%)
Cost of funds
Net

Cash in
Cash out
389,400
116,160
44,484
24,079
13,317
1,100
81,380
389,400
280,520

Item
Cash in
Rent (+10%)
Salaries (+10%)
Raw materials (+5%)
Utilities (+2%)
Miscellaneous (+10%)
Cost of funds
Net

Cash in
Cash out
425,225
127,776
48,932
25,283
13,583
1,210
81,380
425,225
298,164

Year
4

Item
Cash in
Rent (+10%)
Salaries (+10%)
Raw materials (+5%)
Utilities (+2%)
Miscellaneous (+10%)
Cost of funds
Net

Cash in
Cash out
461,794
140,554
53,826
26,547
13,855
1,331
81,380
461,794
317,492

Year
5

Item
Cash in
Rent (+10%)
Salaries (+10%)
Raw materials (+5%)
Utilities (+2%)
Miscellaneous (+10%)
Rent advance payment
Cost of funds
Net

Cash in
Cash out
500,123
154,609
59,208
27,874
14,132
1,464
24,000
81,380
524,123
338,667

 Total aggregated income and expenditures for the

project over 5 years
Year
2009
2010
2011
2012
2013
2014

Cash-in
0
354,645
389,400
425,225
461,794
524,123

Cash-out
Gross profit Tax (18%) Net profit
254,580
(254,580)
(254,580)
264,408
90,237
16,243
73,994
280,520
108,880
19,598
89,282
298,164
127,061
22,871 104,190
317,492
144,302
25,974 118,328
338,667
185,456
33,382 152,074

The financial study

Investment profitability analysis

Simple rate of return SRR
R0
R1
R2
R3
R4
R5

= ( 0-254580 ) / 254580
= ( 354645-264408+28600 ) / 254580
= ( 389400-280519+28600 ) / 254580
= ( 425225-298164+28600 ) / 254580
= ( 461794-317492+28600 ) / 254580
= ( 524123-338667+28600 ) / 254580

(100.0)
46.7
54.0
61.1
67.9
84.1

Payback period PBP

Year
2009
2010
2011
2012
2013
2014

Cash-in
0
354,645
389,400
425,225
461,794
524,123

Cash-out Net profit accumulated

254,580 (254,580)
(254,580)
264,408
73,994
(180,586)
280,520
89,282
(91,304)
298,164 104,190
12,886
317,492 118,328
131,214
338,667 152,074
283,288

Net present value - NPV

Assume discount rate = 10%
Year
2009
2010
2011
2012
2013
2014

Cash-in
0
354,645
389,400
425,225
461,794
524,123

Cash-out
Gross profit Tax (18%) Net profit
254,580
(254,580)
(254,580)
264,408
90,237
16,243
73,994
280,520
108,880
19,598
89,282
298,164
127,061
22,871 104,190
317,492
144,302
25,974 118,328
338,667
185,456
33,382 152,074

THANK YOU