group report subject financial planning and policy start up the dream coffee

The trend of dining and relaxing in the cafe space is growing, an opportunity to expandmarket share and attract new customers.New technologies, like ordering drinks online or paying by p

VIETNAM GENERAL CONFEDERATION OF LABORTON DUC THANG UNIVERSITYFACULTY OF FINANCE AND BANKING

GROUP REPORT

1 B20H0200 Phạm Thị Thu Thảo

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2 B20H0507 Lê Thị Nguyệt Hương

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Tìm kiếm số liệu excel

3 B20H0498 Cao Thị Hoa

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100%

As a student majoring in Banking and Finance, we are looking forward to learning moreabout the industry as well as job opportunities after graduation Due to limited knowledgeand not many opportunities for practical experience, we do not know the details of thejobs that they may have to perform in the future.

Thanks to studying Investment Planning and Budgeting and the dedicated teachings ofMs Do Thi Thanh Nhan and Mr Nguyen Duy Suu, we have somewhat understood thejobs that are likely to happen in the future I will have to do it We also want to expressour deep gratitude to you for sticking with and conveying to us not only knowledge butalso passion for the Industry.

To do this mid-term report on Capital Budgeting, we chose to start a project to open acoffee shop called The Dream Coffee because we all have passions to learn about startupsin particular and finance in general Due to the fact that the knowledge is still incomplete,in the process of doing the test, if there are any mistakes, I hope that you will considerand correct them so that we can learn from them and use them as luggage in the future.Once again, thank you very much!

CHAPTER 1: COMPANY INTRODUCTION 6

1.1 Introduction of projects 6

1.1.1.Project’s name: THE DREAM COFFEE 6

1.1.2.Reasons for choosing the project 6

1.2 Analysis of strengths and weaknesses 6

2.1.5 Expected salary schedule 11

2.1.6 Project capital upon establishment 12

2.2 Revenue Forecast 12

2.3 Forecast costs (Variable costs, fixed costs, production costs and other costs ) 16

2.3.1 Raw materials cost 16

2.3.2 Equipment and tools cost 18

2.3.3 Construction cost 19

2.3.4 Fixed cost 20

2.3.5 Variable cost 20

2.3.6 The initial investment cost 20

2.4 Building the income statement 21

2.4.1 Depreciation 21

2.4.2 Interest expense 23

2.4.3 Net working capital 23

2.4.4 Expected income statement 24

2.5 Building cash flow 24

2.6 Calculate the cost of capital of the project 25

2.7 Project appraisal by NPV, IRR 27

CHAPTER 3: PROJECT RISK ANALYSIS 27

3.1 Types of Risks of the Project 27

Đỏ -> chỉnh sửaCHAPTER 1: COMPANY INTRODUCTION1.1 Introduction of projects

1.1.1.Project’s name: THE DREAM COFFEE

For business people and freelancers, a coffee shop is a familiar place that people often goto to handle their work But not any restaurant is suitable for you to meet your partner andfocus on doing important things with your laptop.

Of course, our coffee and drinks are also very rich and diverse for you to freely chooseaccording to your liking They will be arranged in the most unique way to stimulate yoursight and taste Besides, we wish our customers a great experience when enjoying drinks.

Our Motto"Coffee awakens creativity and inspiration”

1.1.2.Reasons for choosing the project

Drinking coffee is not only a habit but also a culture of Vietnamese people Many coffeeaddicts choose to drink 1 cup of coffee every morning to stay awake before work Inaddition, going to coffee is also an opportunity for people to gather together to chat andexchange feelings The word "go to coffee" is used familiarly when you invite others tohave a drink, even if you don't drink coffee at the shop.

1.2 Analysis of strengths and weaknesses1.2.1 Strengths:

Convenient geographical location, close to residential areas, offices, schools or touristattractions.

The space is beautifully and luxuriously arranged, creating a feeling of comfort, warmthand attracting customers.

The staff is friendly, professional, experienced and ready to serve customers.Diverse in drinks and food, quality assurance, rich flavor, attractive to customers.Reasonable price, suitable for many customers.

Effective advertising and marketing, regularly organizing events and promotions toattract customers.

The trend of dining and relaxing in the cafe space is growing, an opportunity to expandmarket share and attract new customers.

New technologies, like ordering drinks online or paying by phone, increase convenienceand attract younger customers.

Incentives, discounts or promotions can help attract new customers and retain existingcustomers.

1.2.4 Threats:

Fierce competition from competitors, resulting in a decrease in market share and revenue.The change in the tastes of customers, it is difficult to meet their diverse needs.The increase in raw material prices, operating and rental costs, leads to increasedproduction costs and reduced profits.

Food safety, hygiene and environmental issues can affect a cafe's reputation andreputation.

Changes in tax policy and legal regulations may affect the business of the cafe.

CHAPTER 2: APPRAISAL OF INVESTMENT PROJECTS2.1 Project introduction

2.1.1 Products

Main products: we deal in all kinds of coffee, fruit tea, cakes.

The dream coffee address:12 Luong Khai Sieu, Binh Tho, Thu Duc, Ho Chi Minh City, Vietnam

According to the survey, about 2% of current customers are under 18 years old Inaddition, about 88% of the total surveyed are 18-22 years old and about 6% of customersare 23-25 years old This shows that customers interested in this model are students.students and office workers So we've chosen a location that's close to a lot of middleschools, high schools, universities and offices, so it's good to have potential customers inthis age group.

Lines of distribution: food and beverage service

To serve customers of different ages, our coffee shop has a variety of food and drinks.Here, you will enjoy flavorful cups of coffee and delicious pastries made according to theshop's own unique recipe.

In addition, you can enjoy the open space filled with light and greenery It gives a feelingof freshness and freshness that helps the brain to be strongly awakened to start work.2.1.2 Scale of project implementation

Our coffee shop has a basic design with gold and wood tones With 80 square meters, wedivided into four areas:

- Reception area: The seating area is designed to create a cozy and friendly space,using decorative lights and plants to create a green, relaxing space The interiorlayout is simple but comfortable, with tables and chairs suitable for the targetaudience.

- Dispensing area: The dispensing area is designed to be clean, neat and full ofequipment for dispensing, using good lighting to help bartenders work efficiently.- Beverage and food storage area: The area for drinks and food is designed to be

easily accessible and convenient for customers, with suitable tables and chairs sothat customers can enjoy their drinks and food individually comfortably, usinggood lighting to create a cozy and inviting space.

- Upstairs sitting area: The upstairs sitting area is designed to create a private andquiet space besides using some ornamental plants and decorative lights to create acomfortable and relaxing space.

Lighting and sound system: Lighting and sound system should be designed to create acomfortable and attractive space for customers, using soft light, melodious sound to helpcustomers enjoy space comfortably.

To further support customers, we also provide a restroom on the ground floor andupstairs with necessary items such as power sockets, game boards for customer groups.2.1.3 services

Dream Coffee always wants you to understand the value and deep meaning in every sipof water so that the development of the shop is sustainable and long-lasting We expectevery element of young plant growth, every stage of raw material creation From farmerson the other side of the world, to vast oceans carrying bags of coffee the world loves, topeople who care.

We want to create an open and sustainable community where everyone - employees,customers, suppliers - feels safe, finds opportunities, grows and feels supported inbuilding a strong industry We always put the customer first, the staff is ready to help you

when you have trouble at our store In addition, if you are not satisfied with anything atthe store, you can scan the QR code to share with us The Dream coffee will support you.We value diversity and multiculturalism, transparency and fairness Our goal is thecommon development of mankind.

To thank customers on the holidays, The Dream coffee offers you many promotions suchas: buy 2 get 1 free, upsize free, Buy large size coffee get small size coffee, bill over200,000 VND get 1 free the cake…

2.1.4 management organizationManager's job:

the provisions of law and internal processes.

Employee job:

process payments.

- Counter staff: taking orders, providing information to customers, keeping thecounter area clean.

- Cleaning staff: clean, sanitize and maintain the bar area.Protect:

Make sure the bakery and customers are safe.

2.1.5 Expected salary schedule

amount (person)

salary (VNĐ/ month)

into money

Part-time employee (22 500/hour)

2.2 Revenue ForecastEarning Forecast

Total depreciation TOTAL

20,663,050 20,663,050 20,663,050 20,663,050 20,663,050Table 14: Total depreciation

500,000,000 400,000,000

300,000,000 200,000,000

100,000,000Loan

500,000,000Total payment

148,000,000 138,400,000

128,800,000 119,200,000

109,600,000Principle

100,000,000 100,000,000

100,000,000 100,000,000

100,000,000Interest

Ending balance

400,000,000 300,000,000

200,000,000 100,000,000

0Table 15: Interest expense

2.4.3 Net working capital

Revenue

17,603,178,345.87

NWC (11%)

8 815,439,818.03 896,983,799.83 986,682,179.81 1,085,350,397.79

Change in NWC

20,663,050.0020,663,050.0020,663,050.0020,663,050.0020,663,050.00Variable

6,709,279,439.10Fixed

2,430,356,273.27Tax (20%)273,184,352.1

3 319,320,448.34 369,878,154.18 425,299,630.59 486,071,254.65NOPAT1,092,737,408.

Table 17: Expected income statement2.5 Building cash flow

The project is expected to be implemented in 5 years Revenue is expected to grow 10%year-on-year, we estimate variable costs to account for 38% of revenue, COGS for about43% of revenue, and tax at 20% under Corporate income tax law revised 2013.

s 12,023,207,667.42 13,225,528,434.17 14,548,081,277.58 16,002,889,405.34 17,603,178,345.87COGS5,229,874,725,752,862,196,328,148,416,960,963,257,657,059,58

20,663,050.00Variable

6,709,279,439.10Fixed

2,430,356,273.27Tax

1,944,285,018.61Plus:

20,663,050.00Less:

CAPEX -944,377,925.48Less: Change in NWC

-0.00Plus:

Salvage value of NWC

6 1,216,400,862 1,410,477,287 1,623,193,354 3,050,298,466

Table 18: FCF2.6 Calculate the cost of capital of the project

We calculate WACC from our equity and bank loan, in which, the debt is 500,000,000VND that covers 53% of total investment, the remaining weight of the Initial investmentcost (47%) from our equity The cost of debt is the bank loan interest, cost of equity iscalculated by the following formula:

Cost of equity = Risk Free Rate + ( Beta* Equity Risk Premium)

Cost of equity

Beta of comparable companies:Leveraged beta

CTCP Minh Khang Capital

CTCP Bánh kẹo Hải Hà - HHC

Weighted average cost of capital (WACC)

D : Value of loan t : Corporate income tax rate

Cost of equity 17%

Table 19: WACC2.7 Project appraisal by NPV, IRR

As for IRR, IRR is the internal rate of return, which is a measure of the profitability of aproject The higher the IRR, the better the project's return on investment and profitability.Therefore, IRR is 71.79 % greater than WACC i.e project's rate of return is greater thanthe cost of capital invested, the project should be accepted.

CHAPTER 3: PROJECT RISK ANALYSIS3.1 Types of Risks of the Project

3.1.1 Competitors

The model of coffee shop and accompanying cakes is a popular business and is favoredby a large number of consumers, so the number of coffee shops is also relatively large.There are many famous and popular coffee shops known as Starbucks, highland coffee,The Coffee House, etc Besides, there are many shops around our coffee shop withsimilar models, so the competition is quite a lot Making a difference, caring about the

needs and satisfaction of customers is what we aim to make customers trust and chooseour bakery.

3.1.2 Customer risk

Because the main customer of the shopcafe are workers and students, so they have a verysimple and approachable lifestyle When entering a cafe, what they care about most isservice style and comfortable atmosphereroof or not In addition, according to thesurvey through conversations with guests, we know that when entering a cafe, they oftenconsider issues such as:

– The shop cafe Is there enough light?– Is the fee reasonable?

- Is the service good?

– Is the waiter enthusiastic and happy?3.1.3 Marketing failure

In order to attract customers to pay attention to the items on the menu of the coffee shop,attractive promotions are important Customers will grasp drinks and cakes more easilybecause of this Customers are advertised through leaflets and other forms of advertisingon social networking sites, email notifications The goal of the above strategies is toincrease the revenue of the coffee shop, however, if there is not a certain number ofcustomers as required, the revenue will decrease and the project will go bankrupt due tono loyal customers Long-term customers for the restaurant.

3.1.4 Initial cost of the project

The cost of renting space: This is the biggest cost when starting a coffee shopget high.The cost of renting a space depends on the location, the area of the premises and therental period.

Equipment cost: Including equipment such as coffee machine, coffee grindereh, icecream machine, air conditioner, cash register, serving utensils and furniture.

Construction and design costs: Including costs of construction, painting, flooring,decoration and interior design.

Cost of buying ingredients and food: Includes ingredients and food such as coffee, sugar,milk, cream powder, fruit, snacks and other beverages.

Management and staff expenses: Including staff salaries, insurance, taxes and otherexpenses related to the management and operation of the cafe

Marketing and Advertising Expenses: Includes marketing and advertising costs online,offline, print, social media advertising and other marketing channels

3.1.5 State regulations

Compared to Clause 1, Article 66, Decree 78/2015/ND-CP stipulating on individualbusiness households: “Household business is run by an individual or a group of peopleincluding individuals who are Vietnamese citizens who are full 18 years old age, havingfull civil act capacity, or a household owned by a household, may only register a businessat one location, employ less than ten employees, and be responsible with all its assets forbusiness activities.”

3.2 Scenario analysisTable

Scenario Analysis

Best, Worst and Base Case Parameter Assumptions

10,820,886,901 13,225,528,434 14,812,591,846NPV 3,940,345,913 -1,373,221,738 6,220,634,505 10,284,167,795