BT CORP

[22/1/2021]
Project Proposal: Robot Vacuum Cleaner

Background

A robot vacuum cleaner, which is also known as a robo-vac, is a highly advanced cleaning device
designed to automatically clean house floors with minimal human intervention. Robot vacuum
cleaners have become a staple in many households with the increasing popularity of smart homes and
the desire for convenient and efficient cleaning solutions.

Objectives

The project aims to provide households with a new line of outstanding robo-vacs which meet
standards as follows:

Convenience: the robot vacuum cleaner can be set up to automatically clean the home without any
touch because the robots come with scheduling options and can be controlled using a mobile app or
voice commands. While the owners are at work or doing other tasks, freeing up their time and energy
for other things, the home is still clean all day.

Efficient Cleaning: the robot vacuum cleaners are designed to be highly efficient, using advanced
navigation systems and powerful suction to clean your floors thoroughly. They can navigate around
furniture, under beds and sofas, and into tight spaces with ease, ensuring that the entire home is
cleaned from top to bottom. Some models are equipped with sensors that detect dirt and debris,
allowing them to clean more effectively in high-traffic areas.

Improved Air Quality: By removing dirt, dust, and other particles from your floors, the robot vacuum
cleaner can improve the air quality in your home, making it a healthier and more pleasant place to live.
This can be especially important for people with allergies or respiratory issues, as it helps reduce the
amount of allergens and other irritants in the air.

Cost-effective: While some high-end models can be expensive, the project’s robot vacuum cleaners are
generally more cost-effective because they are assembled domestically.

Product, brand name, target customers

Product

The project's product is a popular small-sized robo-vac. The main activity is assembly to produce a
complete product. Because of economies of scale in the electronics manufacturing industry, robo-vacs’
components and circuit boards will be ordered from domestic electronics companies and not produced
by the project itself. The software is bought from popular brands of robot vacuum cleaners currently.
Some brands are in consideration including:

Roomba: Roomba is a popular brand of robot vacuum cleaner known for its advanced features and
innovative design. They offer a range of models, from budget-friendly options to high-end models with
advanced features such as mapping and navigation systems. Roomba models are equipped with
sensors that detect dirt and debris, allowing them to clean more effectively in high-traffic areas.

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BT CORP
[22/1/2021]
Project Proposal: Robot Vacuum Cleaner
Neato: Neato is another popular brand of robot vacuum cleaner known for its powerful suction and
advanced navigation technology. They offer a range of models, including options with laser navigation
and mapping systems. Neato robots are known for their ability to clean efficiently and effectively,
making them a great choice for those who want a thorough cleaning.

ILIFE: ILIFE is a brand that offers affordable and efficient robot vacuum cleaners. Their models are
designed with cost-conscious consumers in mind, offering a good balance of features and performance
at a reasonable price. ILIFE robots are easy to use and come with a range of convenient features,
making them a great choice for those who want a budget-friendly option.

Brand name

The investor decided to name the company and product brand BTrobo if this project is feasible and
implemented. The trademark will be copyrighted as soon as the project begins.

Targeted customers

The project's target customers are households with average and high incomes.

Price

The investors expect a very competitive selling price, only about 600 AUD/robot, estimated for the year 0.
This price will change every year under the combined impacts of two opposing trends. Real prices will
decrease by 6% per year but nominal prices will increase according to the domestic inflation rate.

Expected output

The design capacity of the assembly factory is 45,000 robots/year.

Real production capacity in the first three years is expected to be about 80% of design capacity. The
next three years will reach 90% and the final three years of operation will be 95% of design capacity.

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BT CORP
[22/1/2021]
Project Proposal: Robot Vacuum Cleaner
Finished product inventory

Finished product inventory at the end of each year is estimated at about 10% of that year's production
output.

For simplicity, assume that there is no inventory of electronic components and raw materials.

Timeframe

Name of Work Duration

Phase One Investment 1 year

Phase Two Production and Sale 9 years

Project expenditure

Description of Work Anticipated Costs

Phase One Land rent: 4 hectares in a The rental price for clean leveled land is 10 AUD/m2/year
Suburb of Saint Lucia, based on year 0 price and will be adjusted every 3 years (the
Brisbane, QLD to build a starting year to count is year 1) according to the accumulated
workshop and warehouse. inflation rate of previous years. The rent is paid at the end of
each year. During the year of construction, the Region
Management Board will waive land rent as a way to support
investment for this project. In the liquidation year, the rent is
reduced to half compared to the previous year.

Building: 1 factory
1 warehouse The total one-time cost to the contractor is 2 million AUD.

5 office rooms The economic lifetime of these properties is 10 years

Asset: System of machines The total cost of Purchase and installation is 500 thousand
and equipment AUD. The economic lifetime of these properties is 10 years

Software: negotiated with 3

representatives from 3 The preferential price is 1 million AUD, a one-time payment at
target brands to have the the beginning of production. This cost will be evenly
right to use the company's distributed over 8 years of operation in the form of
installation software amortization of intangible assets.

Phase Two Production:

- Electronic components for This cost is estimated at 450 AUD/robot. Investors believe that
assembling electronic components tend to change in price like product
prices.

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BT CORP
[22/1/2021]
Project Proposal: Robot Vacuum Cleaner
- Labor:
+ Skilled workers: 100 average salary per person is 1200 AUD/month.
+ Unskilled workers: 50 average salary per person is 1000 AUD/month.
+ Engineers: 20 average salary per person is 1500 AUD/month.
These numbers are estimated at year 0
To ensure the living standards of labors and encourage them
to stay long-term with the company, the investor is expected
to increase annual real salaries by 6%. In addition, nominal
wages will be adjusted annually according to the domestic
inflation rate.

- Electricity, water costs: 20 AUD/robot, at year 0, change according to the inflation

depend on production rate.
output
- Packaging: depend on 10 AUD/robot, at year 0, change according to the inflation
production output rate.

Management and sales:

including many items such
750 thousand AUD at year 0, change according to the inflation
as salaries of the
rate. Management and sales expenses in the year of
management and sales
liquidation are estimated to be 20% of the previous year.
department, office rent,
electricity, water,
telephone, stationery,
transaction costs

Working capital

Accounts receivable: estimated about 6% of sales. However, 100% of the inventory sold out in the year
of liquidation will be paid a slum sum (no debt for customers in this year)

Cash balance: estimated at about 0.2% of annual sales to ensure liquidity, and to pay for small and
unexpected expenses.

Account payable: estimated about 5% of the cost of purchasing electronic components.

The investor proposes a plan with no receivables or payables longer than 12 months.

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BT CORP
[22/1/2021]
Project Proposal: Robot Vacuum Cleaner
Loans

The investor is expected to borrow 60% of the investment cost of factories, warehouses and
equipment from commercial banks at the end of year 0 with a nominal interest rate of 12%/year. This
loan will have to be repaid over the next 3 years with equal principal and interest payments. The
remaining investment capital belongs to the investor. The real return on equity (re) is 12%/year.

Corporate income tax rate

20%

Inflation

The expected inflation rate is 5% per year and is assumed to be stable during the project's life.

Note

Finished product inventory will be accounted for using the FIFO method (first in, first out).

Depreciation of fixed assets using the straight-line method (evenly depreciated every year)

Approval Signatures

[Name], Project Client [Name], Project Sponsor [Name], Project Manager

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