BUDGET PROPOSAL FROM YEAR 1 TO YEAR 5

PAPA GEO

EXECUTIVE SUMMARY

Papa Geo plans to open a new restaurant to cater the needs of families and neighborhood.

Gaming arena for children10 year start up loanAim is to make an income of $40,000 per

annum starting from year 2Restaurant will be operational whole week

from 10 am to 9 pm.

Sales Forecast

Selling price per unit is $7Budgeted sales: Year 1: $130,300 Year 2: $149,845 Year 3: $161,832 Year 4: $174,778 Year 5: $188,760

Methods and assumptions

Visited several websites similar to Papa Geo’s restaurant mo

It has been assumed that 51 people on average will visit the restaurant everyday.

The year 2 sales will increase due to the increasing popularity of the restaurant.

Main target of the restaurant are middle to lower middle class families.

Capital Expenditure

Total fixed assets per year:Year 1: 270,800Year 2: 7,400Year 3: 9,400Year 4: 16,250Year 5: 21,900

Investment Analysis

Cash flow Year 1: 483,768 Year 2:305,426 Year 3: 53,583 Year 4:(365,684) Year 5:(376,208)Total payback period: 3.722 years

Investment Analysis (continued)

Rate of return: ARR:2.36 IRR:.4134

NPV Analysis: Net present value:405.73

Conclusion

Business is expected to grow every yearThe main target is middle and lower middle

class families who are price conscious so it is expected that these families will visit the restaurant more frequently.

The NPV of the restaurant is positive 405.73 which means it will generate more income.

The restaurant will face some competition but price sensitive customers will prefer to eat from Papa Geo.