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Haute Higher - Rental Clothing: Project Feasibility Report

This document presents a feasibility report for a proposed rental clothing business in Pakistan called Haute Higher. The initial investment required is estimated at Rs. 1.5 million which will go towards land, building, fixtures, vehicles, and labor costs. Fixed costs include administrative expenses of Rs. 120,000 per year while variable costs include materials, labor, fuel and water, and overhead. The business aims to rent high-end executive clothing to students and professionals for important events. Based on the financial analysis, the project has a positive net present value of Rs. 47,090, an internal rate of return of 15.51% which is above the required rate of 15%, and a benefit-cost ratio greater than 1. Therefore

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Saba Javed Hayat
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303 views

Haute Higher - Rental Clothing: Project Feasibility Report

This document presents a feasibility report for a proposed rental clothing business in Pakistan called Haute Higher. The initial investment required is estimated at Rs. 1.5 million which will go towards land, building, fixtures, vehicles, and labor costs. Fixed costs include administrative expenses of Rs. 120,000 per year while variable costs include materials, labor, fuel and water, and overhead. The business aims to rent high-end executive clothing to students and professionals for important events. Based on the financial analysis, the project has a positive net present value of Rs. 47,090, an internal rate of return of 15.51% which is above the required rate of 15%, and a benefit-cost ratio greater than 1. Therefore

Uploaded by

Saba Javed Hayat
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Haute Higher - Rental Clothing

Project Feasibility Report

PRESENTED BY:

SABA JAVED HAYAT

WALEED NIAZ
a) DESCRIPTION OF THE PROJECT
Rental clothing is what we aim to introduce in Pakistan. It is a popular business prospective for
the youth and individual with not much experience. Currently this form of business idea is being
successfully used in Europe and western world. It enables the youth specially students with very
limited resources to attain the best available designer outfits at the most reasonable rates. No
need to buy just rent these executive clothes for some very important events of your life.i.e.
farewells, marriages, parties etc
According to our feasibility study, Initial cost of setup is Rs. 1.5 million and is as follows;
INITIAL INVESTMENT
Land 600,000
Building 500,000
Fixtures and Equipment 200,000
Vehicles 150,000
Labor (Administration) 50,000

While variable and fixed costs are;


Amount (Rs)
Fixed Cost
Admin Expense 120000
Variable Costs
Materials 300,000
Labor 160,000
Fuel and water 45,000
Overhead 50,000

Admin expenses are taken as fixed cost as we have to keep a track of the clothes rented out.
Hence it is a prerequisite for the entire life of the business. For work in progress, we are
assuming production period of 10 days and total working days are assumed to be 250.
As WIP = {(final stock- initial stock)/2}*(10/250).

b) DIRECT COMPETITORS
Currently no direct competition in Pakistan as this will be the first of its kind.

c) LOCATION
As it is offering high end executive clothes it must be located at a posh area so we prefer it
should be opened at M.M Alam road. For this reason, we have taken the cost of land as Rs.
600000 and cost of building as Rs. 500000; (a cumulative total of 1.1 million that is around 74%
of total initial investment).

d) MISSION STATEMENT
“To innovate and excel in the business of clothing and deliver satisfaction to our customers.”
E1) PROJECT RESOURCE STATEMENT
E2) WORKING CAPITAL CALCULATION
E2) PROJECT FINANCIAL STATEMENT
f) CRITERON OF EVALUATION
NPV 47.09
BCR 1.00825
IRR 15.51%

g) EVALUATION OF PROJECT
We will ACCEPT the project as NPV is 47.09 while IRR is 15.51% which is > d (15%). In
addition, its BCR is greater than 1. So, after calculating and examining all these profitability
measures, we conclude that the project is feasible.

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