PROJECT SKY TAXI

2
PROJECT SKY TAXI
EXECUTIVE SUMMARY

The project sky taxi is premium project of UBER and company is looking to set up the dock
stations at 5 locations in Australia. Company is looking to get funding of 25 million dollar to
make this project happen. Revenue will be generated via taxi fares, the solar panel rebate and
also from the electronic advertising to be placed both on board the VTOL craft and at the Perth
city CBD, Perth Airport, Fremantle, Booragoon and Karrinyup docking stations. The proposed
financing arrangement for the loan is to be financed over a 10-year period. The Sky Taxi
company has stipulated that if the project was to go ahead, the initial project scoping must start
on the 1st of Jan 2021 and has stated that the project is to break even at the end of the 10th year.
This goal is to be achieved from revenue generated via Sky Air taxi fares, solar power rebates
and from the advertising while also taking into account the expected annual ongoing power
supply tariff, maintenance and operational costs. The main objective of company is to find the
optimized value of taxi fare per km to make the project successful.
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PROJECT SKY TAXI
TASK 1 – GANTT CHART

Mechanical Engineering – Scope of works

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PROJECT SKY TAXI
Communications and IT Engineering Scope of Works
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PROJECT SKY TAXI
Electrical Engineering (Scope of works)
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PROJECT SKY TAXI

TASK 2 – AOA DIAGRAM (Electrical Engineering Scope of works)

The early finish and late finish times are as follows:

Activity Early Finish (Weeks) Late Finish (Weeks)
AE 2 2
BE 7 10
CE 6 12
DE 7 7
EE 9 15
FE 20 20
GE 11 11
HE 15 15
IE 12 15
JE 24 24
KE 30 30
LE 33 36
ME 16 20
NE 20 24
OE 26 30
PE 36 36
QE 38 38
RE 13 20
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PROJECT SKY TAXI
2(a)
The critical path is the path of activities for which the early finish and late finish time is same.
The critical path for the above activity is:
AE DE  GE  HE  FE  JE  KE  PE  QE
The duration of the critical path is 38 weeks.
2 (b)
The installation of the interruptible power supply equipment in the main switch rooms cannot be
delayed because this activity comes on the critical path.
2 (c)
The upgrade of 66 KV substation at Perth Airport docking station be delayed by (15-9) 6 weeks
without affecting the completion time of the overall Electrical component of the project.
2 (d)
The installation of the lightning and surge protection equipment be delayed by (36-33) 3 weeks
without affecting the completion time of the overall Electrical Component of the project.
2(e)
The installation of all landing pad lights as per CASA requirements be delayed by (20-13) 7
weeks without affecting the overall Electrical component project.
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PROJECT SKY TAXI
TASK 3 – GANTT CHART (MASTER PLAN)
The Master Plan Activities
Activity Description Predecessors Weeks
A Prepare concept plan broad scope of the Start 9
project
1/Jan/2021
B Seek Public Consultation and stakeholder A 5
engagement

C Prepare Business Case and Obtain B 9

Environmental Approvals

D Commence and Close the Tender Period C 10

E Analyze and award contract to the D 11

winning tenderer.

F Finalise and submit the detailed design of the E 12

Civil, Electrical, Mechanical and the Comms IT
engineering works and wait for final approvals
from CASA (Civil Aviation Safety Authority).

G Ordering of all materials required for the F 18

Civil, Electrical, Mechanical and the Comms
IT engineering works
H Ordering of the ten VTOL crafts F 14
I Completion of the Construction Phase – for G 28
all the Civil scope of works
J Completion of the Construction Phase – for I 44
all Electrical, Mechanical and the Comms IT
engineering scope of works
K Final Commissioning and Project Handover J 10
of the total project and commemorate
with the Premier at a ribbon cutting
ceremony

Note: The duration of Activity J will be the maximum of duration of all electrical, mechanical
and communication Engineering scope of works as these activities are assumed to begin
simultaneously. Therefore, the completion time for activity J is 44 weeks.
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PROJECT SKY TAXI

The overall project completion time is 156 weeks ( 3.25 years)

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PROJECT SKY TAXI
TASK 4 (A)- OVERALL COMPLETION TIME
The overall completion time for the project is 156 weeks as per the master plan.
TASK 4 (B)- ANNUAL REVENUE EQUATION AT 5th YEAR OF
OPERATION
The annual revenue at the 5th year of operation will comprise of revenue from
ticket sales, advertising and solar rebate
Total ticket sales will be:
Destination Total Distance Expected Price Revenue
(km) numbers of per km
Passengers per
year
Perth Air Port 15 180,000 X 2,700,000X
to Perth City
Perth Airport to 30 68,000 X 20,40,000X
Fremantle
Perth City to 14 20,000 X 280,000X
Karrinyup
Perth City to 16 22,000 X 352,000X
Booragoon
Total 5,372,000X

Total Revenue from Ticket sales will be: $ 5.372X million per year
Total Revenue from Advertising per year: $ 0.2 million
Total Revenue from Solar Rebate: $ 0.5 million
Therefore, the revenue equation will be:
Y = 5.372 X + 0.2 + 0.5
Y = 5.372 X + 0.7
where,
Y = annual revenue ( in million dollars)
X = taxi fare price ($) per km
0.7 million dollars is the fixed revenue from advertising and solar rebate per year
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PROJECT SKY TAXI
TASK 5- CASH-FLOW DIAGRAM

Color Sub-Letter Description Inflow/Outflo Start-End Amount per

w Year year (AUD)
A 20% loan Outflow 1-1 $ 5 million
Black B 32% loan Outflow 2-2 $ 8 million
C 38% loan Outflow 3-3 $ 9.5 million
D 10% loan Outflow 4-4 $ 2.5 million
Yellow - Power Supply Outflow 4-10 $ 4 million
Cost
Red Sky Taxi Outflow 4-4 $ 6.5 million
Costs
Blue Operational Outflow 4-10 $ 10 million
and
Maintenance
Cost
Orange Taxi Fare Inflow 4-10 $ 5.372
million
Green Advertising Inflow 4-10 $ 0.2 million
Revenue
Grey Solar Rebate Inflow 6-10 $ 0.5 million
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PROJECT SKY TAXI
TASK 6 - VALUE OF TAXI FARE PER KM IF AT END OF 10 YEARS
At break even, the net present value of cash inflows will be equal to the net present
value of cash outflows.
Using the annuity and economic equivalence formula we get:
A
PV =
(1  r ) n (Annuity)

 (1  i ) N  1 
PV =  A N 
 i(1  i)  (Economic Equivalence)

By using the above formula, the net present value of cash outflows is:
Loan Year 1:
5
PV= = $ 4.859 million
(1+0.029)1

Loan Year 2:
8
PV= = $ 7.555 million
(1+0.029) 2

Loan Year 3:
9.5
PV= = $ 8.723 million
(1+0.029)3

Loan Year 4:
2.5
PV= = $ 2.232 million
(1+0.029) 4

Operational and Maintenance Costs:

 (1  i ) N  1   (1.029) 7  1 
 A i (1  i ) N  10
 0.029(1.029) 7 
PV =      $72.73million
(1  i) N
(1.029) 3

Power Supply and Usage Costs:

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PROJECT SKY TAXI
 (1  i) N  1   (1.029)5  1 
 A i (1  i ) N   4 0.029(1.029)5 
PV =      $15.91million
(1  i) N
(1.029) 5

NPV (Outflows) = $ 112.009 million + $ 5.509 million (VTOL cost)

The net present value of cash inflows will be:

Ticket Sales:

 (1  i) N  1   (1.029) 7  1 
 A i (1  i ) N  5.372 N 0.029(1.029) 7 
PV =     $30.796 Nmillion
(1  i ) N (1.029)3

Advertising Revenue:

 (1  i) N  1   (1.029) 7  1 
 A i (1  i ) N  0.2
 0.029(1.029) 7 
PV =      $1.1465million
(1  i ) N (1.029)3

Solar Rebate:

 (1  i) N  1   (1.029)5  1 
 A i (1  i ) N  0.5
 0.029(1.029)5 
PV =      $2.017 million
(1  i ) N
(1.029) 5

Net Cash Inflow:

$ 30.796N million + $ 3.163 million

30.796N + 3.163 = 117.51

N = $ 3.713
From the calculations shown above, the value of one-way ticket is $ 3.713 at an interest rate of
2.9% and expected to break even at the end of 10 years. The government has stipulated a
constraint that the one-way ticket should be less than or equal to $ 3. Hence, the ticket price of $
3.713 would breach the government constraint for the project.
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PROJECT SKY TAXI

TASK 7 – BREAK EVEN PERIOD AT 2.9% RATE AND $ 3 PER KM TAXI

FARE
The net present value of cash inflows will be:

Ticket Sales:
 (1+i) N -1   (1.029) N-3 -1 
 A i(1+i) N  16.116 0.029(1.029) N-3 
PV =  =  =510.05  X-1 
N 3  
(1+i) (1.029)  X 
where 1.029 N-3 =X

Advertising Revenue:

 (1+i) N -1   (1.029) N-3 -1 

A 0.2
 i(1+i) N   0.029(1.029) N-3 
PV =  =  =6.329  X-1 
N 3  
(1+i) (1.029)  X 
where 1.029 N-3 =X

Solar Rebate:

 (1+i) N -1   (1.029) N-5 -1 

A 0.5
 i(1+i) N   0.029(1.029) N-5 
PV =  =  =14.944  Y-1 
N 5  
(1+i) (1.029)  Y 
where 1.029 N-5 =Y

  X 1  Y  1 
$  516.379    14.944    million
Net present value of cash inflow is   X   Y 
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PROJECT SKY TAXI

By using the above formula, the net present value of cash outflows is:
Loan Year 1:
5
PV= = $ 4.859 million
(1+0.029)1

Loan Year 2:
8
PV= = $ 7.555 million
(1+0.029) 2

Loan Year 3:
9.5
PV= = $ 8.723 million
(1+0.029)3

Loan Year 4:
2.5
PV= = $ 2.232 million
(1+0.029) 4

Operational and Maintenance Costs:

 (1  i) N  1   (1.029) N 3  1 
 A i (1  i ) N  10
 0.029(1.029) N 3 
PV =      $316.48  X  1  million
(1  i ) N
(1.029) 3  X 

Power Supply and Usage Costs:

 (1  i) N  1   (1.029) N 3  1 
 A i (1  i ) N   4 0.029(1.029) N 3 
PV =      $119.559  X  1 million
(1  i) N
(1.029) 5  X 

 X  1
NPV  Outflows   $ 28.878 million  436.039 
 X 
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PROJECT SKY TAXI

BREAK EVEN POINT:

  X  1  Y  1   X  1
$  516.379    14.944    million  $ 23.369 million  436.039 
  X   Y   X 
  X  1  Y  1 
$  80.289    14.944   million  $ 23.369 million
  X   Y  
 1.029 N 3  1  1.029 N 5  1  
$  80.289  N 3 
 14.944  N 5  
million  $ 23.369 million
  1.029   1.029 
88.209 17.2402
95.233    28.878
1.029 N 1.029 N
105.4492
66.355 
1.029 N
1.029 N  1.589
N  16.20 years

Therefore, the break-even is at 16.20 years if the interest rate is 2.9% and Taxi fare
is $ 3 per km
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PROJECT SKY TAXI

TASK 8 – INTEREST RATE CALCULATION AT BREAK EVEN PERIOD

OF 20 YEARS AND TAXI FARE TO BE $ 3 PER KM
By using the above formula, the net present value of cash outflows is:
Loan Year 1:
5
PV=$ million
(1+i)1

Loan Year 2:
8
PV= million
(1+i) 2

Loan Year 3:
9.5
PV= million
(1+i)3

Loan Year 4:
2.5
PV= million
(1+i) 4

Operational and Maintenance Costs:

 (1  i ) N  1   (1  i )17  1 
A
 i (1  i ) N  10
 0.029(1  i )17 
PV =   $  million
(1  i) N
(1  i ) 3

Power Supply and Usage Costs:

 (1  i) N  1   (1  i)15  1 
A
 i (1  i ) N   4 0.029(1  i)15 
PV =   $  million
(1  i ) N
(1  i ) 5

NPV (Outflows)
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PROJECT SKY TAXI
 (1  i )17  1 
10
 0.029(1  i )17 
5 8 9.5 2.5   million 
$ million  million  million  million+$
(1+i)1
(1+i) 2
(1+i) 3
(1+i) 4
(1  i) 3

 (1  i )15  1 
 4 0.029(1  i )15 
$  million  6
(1  i ) 5
(1+i) 4

The net present value of cash inflows will be:

Ticket Sales:

 (1  i) N  1   (1  i)17  1 
 A i (1  i ) N  16.116 0.029(1  i )17 
PV =   $  million
(1  i) N (1  i )3

Advertising Revenue:

 (1  i) N  1   (1  i)17  1 
A
 i (1  i ) N   0.2 17 
PV =    $  0.029(1  i)  million
(1  i) N (1  i )3

Solar Rebate:

 (1  i) N  1   (1  i)15  1 
A
 i (1  i ) N   0.5 15 
PV =    $  0.029(1  i)  million
(1  i ) N (1  i )5

Net Cash Inflow:

 (1  i )17  1   (1  i )17  1   (1  i )15  1 

16.116 0.2 0.5
0.029(1  i)17   0.029(1  i)17   15 
 million   0.029(1  i)  million
$ million  $ 
(1  i)3 (1  i) 3 (1  i)5

After number of trials and errors, it is found that the interest rate would be approx. 1.8841005%
if the break-even period is 20 years at Taxi fare of $ 3 per km.
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PROJECT SKY TAXI

TASK 9- LIQUIDITY, PROFITABILITY AND SOLVENCY RATIOS

GREEN CONTRACTORS
For year 2019
Liquidity Ratios:
1. Current Ratio: Current Assets/Current Liabilities = 3202/3400 =0.94
2. Liquid Ratio: (Current Assents – Prepaid Expense)/Current Liabilities = 0.903

Solvency Ratios:
1. Debt to Equity = Debt/Equity = 1000/2935 = 0.34
2. Total Assets to Debt = Total Assets/Debt = 7335/1000 = 7.335
3. Proprietary Ratio = Shareholder Fund/Total Assets = 2935/7335 = 0.40
Profitability Ratios:
1. Gross Profit Ratio = Gross Profit/Revenue from Operations = 5307/29845 = 17.7%
2. Operating Profit = (COGS + Operating Expenses)/ROE = 27460/29845 = 92 %
3. ROI = Profit before tax and dividend/Capital Employed = 1905/3935 = 48.4%
For year 2020
Liquidity Ratios:
1. Current Ratio: Current Assets/Current Liabilities = 3505/3545 =0.98
2. Liquid Ratio: (Current Assents – Prepaid Expense)/Current Liabilities = 0.94

Solvency Ratios:
1. Debt to Equity = Debt/Equity = 1250/2917 = 0.42
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PROJECT SKY TAXI
2. Total Assets to Debt = Total Assets/Debt = 7712/1250 = 6.16
3. Proprietary Ratio = Shareholder Fund/Total Assets = 2917/7712 = 0.378
Profitability Ratios:
1. Gross Profit Ratio = Gross Profit/Revenue from Operations = 5459/34564 = 15.7%
2. Operating Ratio = (COGS + Operating Expenses)/ROE = 32341/34564 = 93.8%
3. ROI = Profit before tax and dividend/Capital Employed = 1935/4167 = 46.4%
PLANET CONTRACTORS
For year 2019
Liquidity Ratios:
1. Current Ratio: Current Assets/Current Liabilities = 3003/3113 =0.96
2. Liquid Ratio: (Current Assents – Prepaid Expense)/Current Liabilities = 0.923

Solvency Ratios:
1. Debt to Equity = Debt/Equity = 989/3034 = 0.32
2. Total Assets to Debt = Total Assets/Debt = 7136/989= 7.2
3. Proprietary Ratio = Shareholder Fund/Total Assets = 3034/7136 = 0.42
Profitability Ratios:
1. Gross Profit Ratio = Gross Profit/Revenue from Operations = 4924/30350 = 16.2%
2. Operating Ratio = (COGS + Operating Expenses)/ROE = 28214/30350 = 92.9 %
3. ROI = Profit before tax and dividend/Capital Employed = 1901/4023 = 47.2%
For year 2020
Liquidity Ratios:
1. Current Ratio: Current Assets/Current Liabilities = 5330/4000 =1.3
2. Liquid Ratio: (Current Assents – Prepaid Expense)/Current Liabilities = 1.33

Solvency Ratios:
1. Debt to Equity = Debt/Equity = 1131/4406 = 0.25
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PROJECT SKY TAXI
2. Total Assets to Debt = Total Assets/Debt = 9537/1131 = 8.14
3. Proprietary Ratio = Shareholder Fund/Total Assets = 4406/9537 = 0.46
Profitability Ratios:
1. Gross Profit Ratio = Gross Profit/Revenue from Operations = 6900/35100 = 19.6%
2. Operating Ratio = (COGS + Operating Expenses)/ROE = 31270/35100 = 89%
3. ROI = Profit before tax and dividend/Capital Employed = 3478/5537 = 62.8%

After comparing the ratios of both companies, planet contractors have better ratios than green
contractors.
Therefore, planet contractors should be chosen due to following reasons:
Current ratio shows the financial soundness of the business. Higher the ratio means better the
capacity of the company to meet its current obligations. Planet Contractors have better current
ratio than green contractors for both the financial years.
Liquid ratio is a fair measure of liquidity of any company. This ratio is based on highly liquid
assets. Planet Contractors have better liquid ratio as compared to Green Contractor.
Debt-Equity Ratio determines the long-term financial position of the company. Therefore, better
will be ratio if the value is lower. Planet Contractors have lesser debt equity ratio than green
contractors.
Total Assets to Debt Ratio determines the safety margin that is available to lenders having long
term debts. Higher the asset-debt ratio, better will be the position of company. Planet Contractors
have better Total assets to debt ratio as compared to green contractors.
Proprietary Ratio evaluates the extent of total assets that are financed by the proprietor. Higher
the ratio, better the safety margin for the creditors. Planet Contractors have the better capacity to
meet its debt obligations as compared to Green Contractors.
Gross profit ratio displays the relation between gross profit and sales. Higher the ratio, lower the
cost of the goods sold. Planet contractors have higher gross profit ratio than green contractors for
both financial years.
Operating ratio is calculated to examine the operational efficiency of the business. Lower
operating ratio means company is performing better. So, Planet contractors have lower operating
ratio as compared to green contractors for both the years.
Return on Investment examines the overall performance of any business. It measures, how
efficiently the resources interested to businesses are used.
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PROJECT SKY TAXI
Therefore, it is preferred to choose planet contractors as they have higher operational
efficiencies, higher long-term ratios and higher short-term ratio. This shows that planet
contractors are performing better in the market along with higher profits. Higher will be the
chances that planet contractors will finish the project on time.

CONCLUSION
It will be difficult for the company to do break even at the end of 10 years by keeping the taxi
fare at $ 3 per km. However, company must seek the other revenue options along with taxi
service which can help to shorten their break-even time. Also, the company should choose the
planet contractors for the project construction works as their liquidity, profitability and solvency
ratios are better than green contractors.
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PROJECT SKY TAXI