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Feasibility Study Excel Template

The document discusses conducting a feasibility study for a new app development project with an estimated lifespan of 4 years. It calculates the payback period as 3 years and ROI as 30% indicating the project is feasible.

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Beede Ashebir
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1K views9 pages

Feasibility Study Excel Template

The document discusses conducting a feasibility study for a new app development project with an estimated lifespan of 4 years. It calculates the payback period as 3 years and ROI as 30% indicating the project is feasible.

Uploaded by

Beede Ashebir
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Feasibility Study Excel Template

Visit: www.educba.com
Email: [email protected]
whether the property would give better returns on investment, he determines
the economic feasibility of the venture.

Step #1: Let us calculate the monthly expenses for the new business.
Particulars Amount ($)
Rent and Utilities $12,000
Permits and Licenses $5,000
Equipment (Monthly Cost) $2,083
Staffing Costs $105,000
COGS $54,000
Marketing and Advertising $25,000
Total Monthly Expenses $203,083
Total Monthly Expenses $203,083

Monthly Expenses Calculation:


Monthly Expenses = Sum of all Monthly Expenses

Step #2: Calculate the Break-even point (daily required customer count).
Particulars Amount ($)
Total Monthly Expenses $203,083
Average Bill per Customer $40
COGS per Customer $12
Break-even Point (per month) 7,252.98
Break-even Point 7,252.98

Monthly Expenses
Break-even Point =Calculation:
Total Monthly Expenses / (Average Bill per
Customer - COGS per Customer)

Break-even Point (per day) 241.77


Break-even Point 241.77
of 8 years. Mr. Smith, the project manager has to perform an economic feasibility
study about the project and submit a report.

#1: Create a Statement for Initial Cash Outflow

Particulars Amount ($)


Cost of New Equipment $17,500,000
Less: Subsidy -$2,500,000
Add: Working Capital $2,000,000
Net Initial Outflow $17,000,000

Calculation of Initial Outflow:-


Initial Cash Outflow = Cost of Equipment + Working Capital - Subsidy (deductions)

#2: Calculate Depreciation


Particulars Amount ($)
Cost of New Equipment $17,500,000
Total Life of Orignal Equipment 8
Cost of Additional Equipment $1,250,000

Total Life of Additional Equipment 5

Salvage Value of Additional


$125,000
Equipment

Calculation of Depreciation:-
Depreciation = Asset Cost - Salvage Value / Useful Life of Asset

Calculation based on Depreciation


Particulars Year
SLM Method (Amount)

Dep. on Original Equipment (17,500,000 – 0)/ 8 $2,187,500


1 Year - 3 Year
Dep. on Additional Equipment (1250000-125000)/5 $225,000
4 Year - 8 Year - $2,412,500

#3: Build the Statement for PBT

Variable Cost
Sales Volume
Year Sales Price Net Sales @ 60% of Net
(Units)
sales
1 $72,000 $120 $8,640,000 $5,184,000
2 $108,000 $120 $12,960,000 $7,776,000
3 $260,000 $120 $31,200,000 $18,720,000
4 $270,000 $120 $32,400,000 $19,440,000
5 $270,000 $120 $32,400,000 $19,440,000
6 $180,000 $120 $21,600,000 $12,960,000
7 $180,000 $120 $21,600,000 $12,960,000
8 $180,000 $120 $21,600,000 $12,960,000
#4: Build a Statement of Net Cash flow Inflow:

Year PBT Tax @ 30% of PBT PAT Depreciation

1 -$531,500 0 -$531,500 $2,187,500


2 $1,196,500 199500 $997,000 $2,187,500
3 $8,492,500 2547750 $5,944,750 $2,187,500
4 $8,747,500 2624250 $6,123,250 $2,412,500
5 $8,747,500 2624250 $6,123,250 $2,412,500
6 $4,427,500 1328250 $3,099,250 $2,412,500
7 $4,427,500 1328250 $3,099,250 $2,412,500
8 $4,427,500 1328250 $3,099,250 $2,412,500
losses of first year to (i.e. $ 1,197,000 – 532,000 = 665,000). Tax @ 30% on 665000 = 199500. Or (30% of 1196500 - 30%
of 531500) = 3589500 - 1594500 = 199500

#5: Build a Statement for Discounted Cashflows


Discounted
Year Cash Inflows PV Factor @ 12 %
Cash Flows
1 $1,656,000 0.89 $1,478,571
2 $3,184,500 0.80 $2,538,664
3 (Cash Outflow 3 for Additional $8,132,250 0.71 $5,788,375
Equipment = $) -$1,250,000 0.71 -$889,725
4 $8,535,750 0.64 $5,424,623
5 $8,535,750 0.57 $4,843,414
6 $5,511,750 0.51 $2,792,424
7 $5,511,750 0.45 $2,493,236
8 $5,511,750 0.40 $2,226,103
88 (Realization of Working
(Sales of Additional Capital)
Equipment $2,000,000 0.40 $807,766
(Salvage Value)) $125,000 0.40 $50,485
Total Discounted $27,553,937
Cashflows $27,553,937

Note: Company incurs losses in its first year; therefore it is liable to pay zero taxes. Also company is allowed to adjust
its losses for two subsequent years for tax purposes. Hence profit before taxes (PBT) for second year will be reduced
by losses of first year to (i.e. $ 1,197,000 – 532,000 = 665,000). Tax @ 30% on 665000 = 199500.
Or (30% of 1196500 - 30% of 531500) = 3589500 - 1594500 = 199500

#6: Calculate the Net Present Value

Particulars Amount
Total Discounted Cash Inflow $27,553,937
Total Discounted Cash Outflow $17,000,000
Net Present Value $10,553,937
Advice: Since NPV is positively high, hence project should be accepted
FixedCost Depreciation PBT

$1,800,000 $2,187,500 -$531,500


$1,800,000 $2,187,500 $1,196,500
$1,800,000 $2,187,500 $8,492,500
$1,800,000 $2,412,500 $8,747,500
$1,800,000 $2,412,500 $8,747,500
$1,800,000 $2,412,500 $4,427,500
$1,800,000 $2,412,500 $4,427,500
$1,800,000 $2,412,500 $4,427,500
Cash Inflows

$1,656,000
$3,184,500
$8,132,250
$8,535,750
$8,535,750
$5,511,750
$5,511,750
$5,511,750
r (30% of 1196500 - 30%

any is allowed to adjust


d year will be reduced
.
to develop. The estimated lifespan of the app is 4 years. To determine if this
project is feasible, we need to conduct a feasibility study.

#1: Let us calculate the payback period.


Particulars Amount ($)
Development cost $250,000
Expected Revenue $300,000
Profit Margin 25%
Annual net cash inflow $75,000
Payback Period (years) 3
Payback Period 3

Payback Period Calculation:


Payback Period = Development cost / Annual net cash inflow

Step #2: Calculate the ROI.


Particulars Amount ($)
Annual net cash inflow $75,000
Development cost $250,000
ROI 0.30
ROI 0.30

ROI Calculation:
ROI = Annual net cash inflow/ Development cost
Let's assume that a company is considering introducing a new product line
of eco-friendly kitchen cleaning products.

Particulars Amount ($)


Profit per unit $5
Number of units sold 12,500
Monthly profit $62,500
Monthly profit $62,500

Monthly profit Calculation:


Monthly profit = Profit per unit x Number of units sold

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