Investment ROI Analysis
Return on Investment (ROI)
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Based on our cash flow projections, the estimated net profit after one year of operation ranges from £120,000 to £180,000. Assuming an initial investment range of £432,500 to £675,000, the ROI would be calculated as follows:
ROI (Lower End) = (£120,000 / £675,000) * 100 = 17.8%
ROI (Upper End) = (£180,000 / £432,500) * 100 = 41.6%
The ROI for Year 1 is estimated to be between 17.8% and 41.6%, depending on the actual net profit achieved within the projected range and the total initial investment required.
Payback Period
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Using our cash flow projections, we estimate that the initial investment of £432,500 to £675,000 will be recouped within the following timeframes:
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Lower End Investment (£432,500): 2.4 to 3.6 years
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Upper End Investment (£675,000): 3.8 to 5.6 years
These payback period estimates are based on the projected net profit range for Year 1 and the anticipated growth in subsequent years. The actual payback period may vary depending on the total initial investment and the business's financial performance over time.
Net Present Value (NPV)
Methodology:
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Discount Rate Selection: Based on industry trends and considerations for ventures targeting niche markets like the LGBTQIA+ community, we'll use a discount rate of approximately 8% to 10%. This rate reflects the potential stability and growth prospects associated with businesses catering to specific demographics.
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Cash Flow Projection: Utilising the provided cash flow projections, encompassing monthly and quarterly cash flows for the first five years, we'll discount each projected cash flow back to its present value using the selected discount rate.
Conclusion:
The NPV analysis, based on a discount rate of approximately 8% to 10%, will provide investors with valuable insights into the financial viability and potential return on investment offered by Hadrian's Lover. By discounting projected cash flows and considering market dynamics, we aim to demonstrate the attractiveness of the investment opportunity and its alignment with prevailing market rates.