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Financial Feasibility Study Overview

The document presents a financial study for a proposed P160 million property development project in Davao City, Philippines. It includes projections for investment costs, financing, lease revenues, operating costs, and financial statements over a 5-year period. The projections estimate that lease revenues will increase 10% annually to P30.7 million in year 1 and P67.4 million in year 5 as the local property market grows. Operating costs are estimated to rise to P25.7 million by year 5. Financial ratios like net profit and returns are projected to improve each year as revenues rise faster than costs.

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Juan Frivaldo
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3K views5 pages

Financial Feasibility Study Overview

The document presents a financial study for a proposed P160 million property development project in Davao City, Philippines. It includes projections for investment costs, financing, lease revenues, operating costs, and financial statements over a 5-year period. The projections estimate that lease revenues will increase 10% annually to P30.7 million in year 1 and P67.4 million in year 5 as the local property market grows. Operating costs are estimated to rise to P25.7 million by year 5. Financial ratios like net profit and returns are projected to improve each year as revenues rise faster than costs.

Uploaded by

Juan Frivaldo
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
  • Financial Assumptions
  • Operating Costs
  • Lease Revenues
  • Projected Financial Statements
  • Financial and Economic Analysis

611 Properties

Ma-a, Davao City

FINANCIAL STUDY

1. Financial Assumptions

The following table highlights the financial assumptions of the project.

Table 1: The Financial Assumptions of the Project

2. Investment Cost

The project's investment cost is estimated at P160 million distributed among project cost
of P150,000,000, and working capital of P10,000,000.

The following table shows the project's investment cost.

Table 2: The Project's Investment Cost

3. Financing

The project will be financed by the shareholders in the company by 38% which is
estimated at P60 million, while the 63% will be financed through bank loans of about
P100 million.

The following table shows the financing schedule for the implementation of the project.

Table 3: Project Financing Schedule


4. Lease Revenues

The following table depicts the total revenues of the project, where it is noted that the
revenues will be earned through rental services. The first three floors will be occupied
by a school, while the next three floors will be used by BPO units. The lease revenues in
the first year amounts approximately to P30.7 million, and increased rapidly by 10%
each year due to the thriving developments in Davao City.

Table 4: Projected Lease Revenues

Figure 1: Projected Lease Revenues

5. Operating Costs

The following table shows the project's operating costs over five years. The total
operating costs in Year 1 amounted to P24.511 million which will increase to reach
P25.761 million in Year 5.

Table 5: Projected Operating Costs


Figure 2: Projected Operating Costs

6. Projected Financial Statements

Statement of Financial Performance

The following table shows the projected statement of financial performance of the
project. It shows that the relationship between operating costs and income tax to total
lease revenues in Year 1 is 85.98% which is expected to decreased to 70.18% in Year 5.
Income after tax in Year 1 is 14.02% which is probably to reach 29.82% in Year 5.

Table 6: Projected Statement of Financial Performance

Figure 3: Projected Statement of Financial Performance


Statement of Financial Position

The following table shows the projected statement of financial position during the first
five years. It indicates that total assets will increased from P164 million in Year 1 to
P203 million in Year 5. The shareholders equity will increase from P64 million in Year 1
to P103 million in Year 5.

Table 7: Projected Statement of Financial Position

Statement of Cash Flows

The following table shows the projected statement of cash flows of the project. It
depicts that the cash will increase from P17 million in Year 1 to P68 million in Year 5.

Table 8: Projected Statement of Cash Flows

7. Financial and Economic Analysis

Financial Analysis
The following table shows the financial analysis of the project. It portrays that the net
profit ratio will increase from 14% in the first year to 29.8% in the fifth year, the return
on investment will increase from 2.6% in the first year to 6.6% in the fifth year, and the
return on capital will increase from 6.7% in the first year to 13% in the fifth year.

Economic Analysis

The project payback period is 5.53 years based on invested capital and average net cash
flow.

611 Properties Ma-a, Davao City FINANCIAL STUDY 1. Financial Assumptions The following table highlights the financi
4. Lease Revenues The following table depicts the total revenues of the project, where it is noted that the
Figure 2: Projected Operating Costs 6. Projected Financial Statements Statement of Financial Performanc
Statement of Financial Position The following table shows the projected statement of financial position during the fir
The following table shows the financial analysis of the project. It portrays that the net profit ratio will increase from 1

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