Cost-Benefit Analysis
Premises:
In our finding, we will suggest Realeyes to have a physical presence including at least one staff and a fixed office in Australia.
Management: considering customer's perception of Realeyes' commitment in Australia, the staff recruitment should be at least contractual and working as full time, rather than part-timer.
Office: one fixed address with landline and internet
Corporate Identity (CI): Folders, envelops, business card and basic office stationery could print with CI (cost can be coordinated to spread with Realeyes’ subsidiaries).
Table 34 – Cost/Budget table
Established costs of setting up an office in Sydney*
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Established cost
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$AUD
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1
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Registration fee of ABN (Note1)
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133
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2
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Office rental for 1st month
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679
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3
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Bank deposit (3 month rents)
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2037
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4
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Outfit decoration
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7200
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5
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CI
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60
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Operation cost F(for 1st month)
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6
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Payroll
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6000
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7
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Utilities
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0
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8
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Auditing fee
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0
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Total sum
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16109
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*Please refer Appendix G for Notes and assumptions on the financial analysis
Methodology
1. We use cash flow concept to deduct the break-even revenue (assume break-even in 1 year)
2. The break-even might not reflect the reality while the model can be expanded to estimate a price point customized to Realeyes' internationalization schedule
3. Payroll, office rental, machine rental and deprecation are based on currently market price while they might be variable in individual cases***
$AUD
Break-even Revenue
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124438
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Established cost
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16109
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(-)Operating costs
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108329
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Office rental (residual 11 months)
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7469
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Payroll (11months)
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66000
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machine rent (exclusive PPU)
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28320
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Sales travel expense
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3540
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Promotion costs
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3000
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(+)Depreciation & Amortization
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0
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(-)Tax
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0
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Assumption 1
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Assume equals to Realeyes UK (£1200=$A 2360 ) ; convert rate: 1.00 GBP = 1.97 AUD
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Assumption 2
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Assume equals to Realeyes UK (£150=$A 295 ) ; convert rate: 1.00 GBP = 1.97 AUD
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Assumption 3
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No tax cash outflow in first year
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P=AUD $ 124438
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Figure 43 - above shows the Break-even point for Realeyes’ business investment in Australia, for the estimated period of 1 year of business activity. (chart: http://tutor2u.net/business/images/break_even.gif)
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