Based on Exhibit I prepare a discounted cash flow analysis (NPV) of this venture. Assume the different customer levels in Exhibit I represents the average monthly customer base for each year – expected monthly customer base for year one is 187 customers per month. By year four the expected customer base is 328 per month. Also assume the listed expenses are a reasonable estimates as far as they go; are there any other expenses that should be considered? Assume a 35% tax rate, annual depreciation and amortization of $22,583, no change in non-cash working capital or long term assets over the next four years, a cost of equity capital of 20%, SBA loan at 6.5%, a $333,000 total investment with $80,000 in equity and a $253,000 SBA backed loan, and the terminal value based an after-tax operating profit valuation multiple of 6. To calculate the terminal value apply the valuation multiple to the projected cash flow in year four and add this value to the projected cash flow for year four. Does the venture appear profitable?
Based on Exhibit I prepare a discounted cash flow analysis (
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