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ECON 115 PROJECT

ECON 115 PROJECT. ONLINE GAME CENTER. Introduction. The on-line game center Better atmosphere Know more friends High speed Variety of game. Choose Place. MongKok VS Tuen Mun Advantages of MongKok Many young people would go to there Good transportation network. Choose Place.

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ECON 115 PROJECT

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  1. ECON 115 PROJECT ONLINE GAME CENTER

  2. Introduction The on-line game center • Better atmosphere • Know more friends • High speed • Variety of game

  3. Choose Place MongKok VS Tuen Mun Advantages of MongKok • Many young people would go to there • Good transportation network

  4. Choose Place Advantages of Tuen Mun • The largest proportion of youth live in • Rent price is low • Large accommodation is available and affordable. • Very few competitors • Many schools and housing

  5. Scale • Size: 2000 square feet (about the size of barn B) • No. of computer: 50 sets • Computer cost: $12000 each • No. of game type: 30 types initially

  6. Service • Café with snacks and drinks • Clean and tidy environment • 3 small rooms for each have 4 computers • Solving computer technical problems • Some useful free software

  7. Cost estimation Fixed cost: Decoration: $250,000 Computer: $50(no. of computer)x12,000 =$600,000 Game(8-20pieces for a game): $30(no. of game)x10(avg. pieces per one game)x400 =$120,000 Total: $970,000

  8. Cost estimation Periodic cost(per month): Rent: 2,000sq.ft. $2,000x17 = $34,000 Salary: 3x8,000 = $24,000 Electricity: $1500 (Computer is energy saved equipment) Buy new games: 2 games x 10 pieces x $400 each = $8,000 Wideband transmission cable: $10,000 Other: $1500 Total: $79,000 Equipment enhancement: $3,000x50per year = $150,000per year

  9. Present worth Study Period: 2yrs MARR: 20%/yr Compound Interest Rate per month (1+20%)1/12-1 = 1.53% PWCOST = $970,000 + $79,000(P/A, 1.53%, 24) + $150,000(P/A, 20%, 2) = $970,000 + $1,576,902 + $229,166 = $2,776,068

  10. Revenue estimation Opening hours:12:00noon-11:00pm In normal day: $15/hr Holiday, Saturday & Sunday: $20/hr Average: ($15 x 22 day + $20 x 8 day)/30 day =$16.3/hr Salvage value: 50x12,000x50% = $300000

  11. Revenue estimation Expected revenue: 1st month: (5hr/pc x 50pc x $16.3/hr)/day x 30day = $122,500 . : +$9800/month 6th month: (7hr/pc x 50pc x $16.3/hr)/day x 30day = $171,500 . : 24thmonth: $171,500 + $300,000(Salvage value)

  12. Present worth PW revenue = $122,500(P/A, 1.53%,5) + $9,800(P/G, 1.53%,5) + $171,500(P/A, 1.53%,19) (P/F, 1.53%,5) + $300,000(P/F, 20%, 2) = $3, 489,705

  13. Total present worth PW = $3,489,705 – 2,776,068 = $713,637

  14. IRR When I = 20% PW = $3,489,705 – 2,776,068 = $713,637 When I = 60% PW = $2,600,378 - $2,328,087 = $272,291 When I = 80% PW = $2,323,094 - $2,187,604 = $135,490

  15. IRR When I = 100% PW = $2,108,582 - $2,078,575 = $30,007 When I = 110% PW = $2,015,524 - $2,031,302 = -$15,777 15,777/(1.1-I) = 30,007/(I-1) I = 1.065 1/I X 12= 11.28 Payback period is about 11 months

  16. Conclusion Business: On-line game center Reason: better atmosphere Know more friends High speed Variety of game Place: Tuen Mun Scale: About barn B with 50 set computer Capital: 1 million Payback period: 11 months

  17. Team Member Chan Man Hong ee_cmhab Chen Ta Wei ee_ctwac Lau Chun Ho ee_lchab Leung Pak Kei ee_lpkaa Wong Sai Wai ee_wsw Yip Chun Keung ee_yck Yip Wai Lam ee_ywlaa

  18. END

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