Comprehensive Economic and Financial Analysis of Smart Watch Project

This report provides a comprehensive economic and financial analysis of a Smart Watch project undertaken in Australia. It begins with an introduction, project background, and clearly defined objectives and justifications. The report outlines the assumptions, constraints, and expected outcomes of the venture. A literature review provides context, followed by an overview of project economical analysis techniques and tools, including Uniform Annual Cash Flow, Net Present Value (NPV), Internal Rate of Return (IRR), Modified IRR, and Cost Benefit Analysis. Other decision-making models such as the Multi-Attribute Decision-Making Model (MCDM) and Analytical Hierarchy Process (AHP) are also discussed. The report further explores best practices for business growth, including strategies and the Profitability Index, culminating in a recommendation based on the analysis. The project focuses on a Smart Watch venture, examining its financial viability, economic impact, and growth potential within the Australian market. The analysis includes a detailed valuation of the project, assessing various financial aspects and providing insights into the project's sustainability and potential for success.

Running head: VENTURE PROJECT ECONOMICS AND FINANCE
Venture Projects Economics and Finance
Name of the Student:
Name of the University:
Author’s Note:

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VENTURE PROJECT ECONOMICS AND FINANCE
Table of Contents
Introduction................................................................................................................................2
Project Background....................................................................................................................2
Project Objectives and Justification...........................................................................................3
Assumptions, Constraints and Expected Outcomes...................................................................4
Literature Review.......................................................................................................................5
Overview of Project Economical Analysis Techniques and Tools............................................6
Uniform Annual Cash Flow.......................................................................................................9
Net Present Value (Present Worth)..........................................................................................13
Internal Rate of Return (IRR)..................................................................................................13
Modified IRR...........................................................................................................................13
Cost Benefit Analysis...............................................................................................................13
Other Decision Making Models - Multi-Attribute Decision-Making Model...........................18
MCDM in Financial Decision Making for Projects.................................................................18
MADM.....................................................................................................................................19
Analytical Hierarchy Process (AHP).......................................................................................20
Best Practices for Business Growth.........................................................................................20
Business Growth Strategies......................................................................................................22
Profitability Index....................................................................................................................23
Recommendation......................................................................................................................23
Reference List and Bibliography.............................................................................................25

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VENTURE PROJECT ECONOMICS AND FINANCE
Introduction
With the development of innovation and science there has been construction of
various projects throughout the world keeping in mind the main objective of to enhance the
operational and financial structure of the world. It has been viewed that there are different
projects that have been built with a specific end goal to fabricate new structures and
innovative products that would improve the way of life of the people residing globally
(Marglin, 2014).
This paper hence has been established so as to embrace a critical assessment of a
sustainable venture that is performing in the country of Australia so that a lucid idea
regarding the project background and the aims and goals of the project can be conceived. The
evaluation of the economic assessment and techniques and equipments would even be
explained and the cost benefit analysis in relation to the project can even be understood with
regards to the goal in order to obtain a clear idea. The project is about the incident of creating
a busi9ness in Australia and hence the team members are said to construct the cost benefit as
well as the economic analysis. The project has been constructed by assessing the literature
review where the economic as well as the cost benefit analysis has been portrayed. This paper
has considered Smart Watch project in Australia that has been functioning from the year 2012
and has still been going on in order to gain precise knowledge about the costs and the
economic tools used for the establishment of the same.
Project Background
This venture has been undertaken by computing numerous researches within the
market of Australia and thereafter establishing the review of literature. With the development
of science and technology there has been introduction of various new products that are
becoming useful in our daily life as well (Nas, 2016). The concept of Smart Watch has been

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VENTURE PROJECT ECONOMICS AND FINANCE
in the mind of the developers for a very long time as they had a desire of providing a variety
of features within a watch which would lower the burden of carrying various articles for a
human being. The project in relation to the development of Smart Watch has been initially
undertaken by the private sector organizations that are functioning in the country and they
have the idea of developing new and improved features within the watch that would look into
our personal as well as fitness life. It has been observed that Australia has a market that is a
vibrant and a free democracy and has been rising ever since. The economy of the country had
a set back during the initial period of the establishment of the project but as the years have
passed there has been a rapid development and this has motivated the investors as well as the
stakeholders to undertake further investments in such innovative projects (Mishan, 2015).
The idea of the project has been sustainable addition of new and improved features that
would be useful to mankind and therefore this project has still been going on with various
researches taking place each and every day in order to bring out the best possible product for
the same.
The delivery of such product in the market would mean enhancement of the lifestyle
of mankind and in that manner development of the economy as a whole (Griffin, 2016). This
project is a private sector venture and Technocrat is the organization who is liable for the
design and, maintenance, financing and operational activities that are common for the
deliverance of the project. This project would enhance the value for money property and
would lead to rise in quality products in the Australian market.
Project Objectives and Justification
The development of the project has been to improve the lifestyle of the consumers of
the country and enhancing the confidence and the satisfaction level of the communal societies
with the help of a variety of other features that reduce the level of reoffending.

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VENTURE PROJECT ECONOMICS AND FINANCE
The venture has shown a significant level of investment in the manufacturing and the services
of the Smart Watch with the assistance of Technocrat, which would lead to deliverance of
innovative and improve products. The project is fundamental in giving economic benefits and
raising the level of employment within the country as there are scope of employment of
around 800 employees during the initial stages of the development of the product and later on
an additional of 100 employees would be essential for the sales, promotion and marketing of
the product in the economy of Australia. The objective of the venture has hence been
discussed below:
 Provide added capacity in the technological industry
 Provide added features to the consumers of the country
 Provide supplementary capability in order to lower the level of reoffending
 Motivate in procedures and practices that are innovative in nature and efficient
operations that would raise the value for money
The justification for the undertaking of the project has been to improve the lifestyle of the
consumers and to make a healthy and a happy environment for the existence of the society.
Assumptions, Constraints and Expected Outcomes
The construction of the project has been possible by looking at the assumptions and
the financial capability. The assumptions of the venture has been gaining knowledge about
the financial scenario of the organization undertaking the venture and the number of members
who are functioning in the development of the product that would be helpful in delivering the
project within the stipulated time period.
There are several challenges and risks associated with the venture as well like the
challenges with respect to the planning of the venture, gaining various permits and approvals
for the initiation of the project etc (Keohane, & Olmstead 2016). The other risks involve the

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VENTURE PROJECT ECONOMICS AND FINANCE
risks related to the design and the financial and the activity based risks that can be very
harmful for completing the Smart Watch project. The anticipated outcome would be that the
expansion in the market of smart watches would act as drivers for the organizations to
establish smart watches more for selling them in the Australian market. It has been
anticipated that this business would even be reaching the breakeven point within certain years
after its initiation of their operations and would then look to create profits for them.
Literature Review
The review of literature would contain the different information with respect to the
equipments and devices that have been utilized by the venture on request to decide their
operational exercises and to construct the economic assessment and the cost benefit
assessment of the Smart Watch project. This area of the paper would give a broad research
and assessment of the present worth, cash flows, internal rate of return alongside the
profitability index and techniques of business development and their appropriate procedures
with the goal that the venture can be finished up accurately. The utilization of the MADM
and MCDM financial assessment process would be powerful to understand the procedure that
would be utilized as a part of request to comprehend the present financial and the economic
scenario of Smart Watches in Australia.
The venture clarifies about the review of the literature and the clarification with
respect to the economic investigation and the cost benefit examination of the Smart Watch
Project. A small outline of the model of risk evaluation of Smart Watch project in Australia
will be talked about in this area. The procedure of economic investigation are characterized
as the scientific and measurements and designs. The economic analysis depends on the
different strategies for the sensitivity of the economy and keeping in mind the end goal to

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VENTURE PROJECT ECONOMICS AND FINANCE
make efficient identification of the comparative information and therefore it is fundamental to
explore at least two procedures.
Overview of Project Economical Analysis Techniques and Tools
Australia is viewed as a vivacious free democracy of the market and there has been a
dynamic economical advance that has been conceivable because of nonattendance of any
kind of recessions. The successful procedure of the legislative system of Australia has been
helpful for the economy and a free well-working lawful framework, bureaucracy has been the
key factor for efficient entrepreneurial upgrade. Australia is considered as an alluring and
dynamic country for investment. In the greater part of the situations, the legislature has
diminished the level of investments and has motivated the private segment to attempt
investments in various innovative projects (Posner, 2014). This has been seen in the Smart
Watch Project where ventures are embraced essentially by the private sector. Australia has
been successfully aggressive in the technological aspects of manufacturing of products and
services. The rate of income tax is 45% and the rate of corporate tax has been 30%.
One of the hopeful parameters of venture start ups in Australia has been rate of start
up being higher as they have the likelihood leading to the development. The new business
projects in Australia like the varieties in sources of funding and ventures like the Smart
Watch Project tries to influence utilization of the equity finance amid the primary phases of
the developments. The nation has been encountering issues and shocks in the amid the
previous couple of years yet in the first quarter of 2017, the economy has recouped from this
circumstance and this has seen a rise in the business confidence and the investors as well as
the consumers in this manner would positively affect the investments in the business and
expenditure of the investors (Morgenstern, 2014). The Australian economy is thought to be
inside a strong base notwithstanding the different shortcomings in the ventures that are in

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VENTURE PROJECT ECONOMICS AND FINANCE
nature non-mining. As for Smart Watch project in Australia it has been watched that the
undertaking has been encountering development and as this is an on-going procedure and this
has prompted to rise in investments. The Australian economy has remained firm and has been
developing despite the ascent in the cost of petrol and this has prompted the fall in the
disposable income for the customers. The economy of the nation has been rising with the
ascent in the interest rate which is being utilized for decreasing the inflation rate. The
development of the economy has been conceivable as the government has been reducing the
taxation rate (Blau et al., 2013). This would energize the financial investors of the business
ventures to expand their interests in the Smart Watch project. This has prompted the
development of the smart watch more successfully. The investigation of the Smart Watch has
been conceivable with the help of economic analysis like the development of the factors that
are accessible in the venture and the personalities, capacities and the equations that have been
found in the venture report of Smart Watch Project.
The economic analysis of the venture has been conceivable by taking a look at the
costs and the aggregate funding that has been embraced for the conclusion of the venture. The
table beneath would show an overview of the valuation of the project:
Particulars Amount
Residual
Value
Non-Current Assets:
Trademark 400000 0
Patent 700000 0
Property,Plant & Equipment 14000000 4200000
Furniture & Fittings 900000 135000
Motor Vehicle 1400000 560000
Computer Equipment 1400000 0
Preliminary Expenses:
Business Registration 90000
License Fees 140000
Deposit for Electricity 90000 90000

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VENTURE PROJECT ECONOMICS AND FINANCE
Deposit for Telephone &
Internet 40000 40000
Recruitment Cost 20000
Share Issuance Cost 25000
Bond Issuance Cost 10000
Other Miscellaneous Expenses 65000
Working Capital:
Purchase of Raw Material 18000000
Wages & Salaries 13500000
Manufacturing Overhead 8250000
Selling & Marketing Expenses 547750
General Administrative
Expenses 304750 40602500
TOTAL START UP COST 59882500
Capital Funding:
Equity Capital 26947125
5 yrs. Bond 19761225
Loan From Bank 13174150
TOTAL CAPITAL
EMPLOYED 59882500
The timeframe that has been assigned to the employees who are functioning in the Smart
Watch project has been provided in the table below, which would act as a guideline of the
procedures that would be undertaken for the completing the venture within the stipulated
time.
Assignment Start date Submission Duration
Start up 1/03/2017 7/03/2017 1 week
Activity 1-
Researching the
Australian markets and
08/03/2017 12/03/2017 4 days

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VENTURE PROJECT ECONOMICS AND FINANCE
its economic scenario
Activity 2- Financial
evaluation of project
13/03/2017 30/03/2017 3 week
Activity 3-
Determining the
financial viability of
project by selecting the
best alternative
31/03/2017 09/04/2017 2 weeks
Uniform Annual Cash Flow
The annual cash flow that is equivalent in nature for Smart Watch project consists of
the inflow and the outflow of the cash. The cash flow gained from the operating activities
means the payments that have been given to the suppliers and the cost related to direct labor.
The annual cash flow of this project has been provided below:
CASH FLOW STATEMENT:
Particulars Year 1 Year 2 Year 3 Year 4 Year 5
Cash Flow from Operating
Activities:
Cash Sales $42,000,00
0
$46,063,50
0
$50,520,14
4
$55,407,96
8
$60,768,68
8

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VENTURE PROJECT ECONOMICS AND FINANCE
Collection from Debtors $57,750,00
0
$68,587,31
3
$75,223,13
5
$82,500,97
3
$90,482,94
2
Cash Purchase ($14,400,0
00)
($15,793,2
00)
($17,321,1
92)
($18,997,0
17)
($20,834,9
79)
Payment to Suppliers ($18,000,0
00)
($23,341,5
00)
($25,599,7
90)
($28,076,5
70)
($30,792,9
78)
Direct Labor Cost ($24,750,0
00)
($29,394,5
63)
($32,238,4
86)
($35,357,5
60)
($38,778,4
04)
Manufacturing Expenses ($16,500,0
00)
($18,096,3
75)
($19,847,1
99)
($21,767,4
16)
($23,873,4
13)
Insurance ($11,000) ($11,275) ($11,557) ($11,846) ($12,142)
Rates & Taxes ($5,500) ($5,638) ($5,778) ($5,923) ($6,071)
Salary of Office Staffs ($82,500) ($92,063) ($94,364) ($96,723) ($99,141)
Cleaning Charges ($4,000) ($4,100) ($4,203) ($4,308) ($4,415)
Electricity for Office ($12,833) ($14,321) ($14,679) ($15,046) ($15,422)
Telephone & Internet ($6,417) ($7,160) ($7,339) ($7,523) ($7,711)
Salary of Marketing Staffs ($128,333) ($143,208) ($146,789) ($150,458) ($154,220)
Sales Commissions @1.5% on
Sales
($525,000) ($575,794) ($631,502) ($692,600) ($759,609)
Travelling charges @2% on
Sales
($262,500) ($287,897) ($315,751) ($346,300) ($379,804)
Income Tax Expenses ($5,760,05 ($6,490,09 ($7,287,75 ($8,159,95 ($9,114,24

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VENTURE PROJECT ECONOMICS AND FINANCE
1) 1) 6) 9) 0)
Cash Inflow/(Outflow) from
Operating Activities
$19,301,86
6
$20,393,62
9
$22,216,89
4
$24,219,69
3
$26,419,08
2
Cash Flow from Investing
Activities:
Purchase of Non-Current Assets ($18,800,0
00)
Preliminary Expenses ($480,000)
Sale of Assets $4,895,000
Return on Deposits $130,000
Cash Inflow/(Outflow) from
Investing Activities
($19,280,0
00)
$0 $0 $0 $5,025,000
Cash Flow from Financing
Activities:
Share Issue $26,947,12
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