9. Financing Plan

9.1 Estimated Loss and Profit Sheet
Description of compilation of annual loss and profit:

 1. The balance of production and sale cannot be realized, although the unit price of sale is high in the first year, the goods on hand at the end of period would be sold in the second or third year.
 2. The expenses of financing business are the interest of short and long term loans
 3. The subsidy income is a refunding of national tax of the investment enterprises or foreign traders and high tech enterprises
 4. The unit sale cost will be high in the beginning, and then reduced gradually, once more beginning to raise and remain at average levels
 5. The income tax rate is 33%
 6. The profits after tax at the beginning will be high, then to be reduced, but the average profits of 400 million yuan will be maintained.

9.2 Cash Flow Accounting Analysis
Antedated compilation description of cash flow accounting:

 1. The subsidiary stock dividends would not be distributed for three years. The distribution would begin from the fourth year.
 2. The income tax must be prepaid quarterly, the liquidation at the end of year. The balances will be paid to either side as the case may be.
 3. The prospective exchange rate will be up.

9.3 Expected Assets Indebted Sheet
Compilation description of annual assets indebted:

 1. The time of the installments accounts receivable is 60 days.
 2. The time of payable account is 60 days.
 3. The income tax must be prepaid quarterly, the liquidation at the end of year. The balances will be paid to either side as the case may be.
 4. The earning retained would not be distributed for three years. The fourth year will begin distribution.

9.4 Balance Analysis of Profits and Loss
Balance analysis of profit and loss in the first year:

 1. Expected average selling price: 8’000 yuan/ton.
 2. Expected variable cost: 4’200 yuan/ton.
 3. Expected marginal contribution: 800’000 - 420’000 = 380’000 yuan/ton.
 4. Expected total amount of fixed costs in a year: 2.8 billion yuan.
 5. Expected sales volume of balancing profits and loss: 260’000’000.00 : 3’000 = 86’667.00 yuan.
 6. Expected value of sales: 86’667 x 7’000 = 606’669’000.00 Yuan.

9.5. Capital Sources and the Application of Funds
Total investment of this project is 2.55 billion yuan RMB, of which 550 million yuan is the funding from self-financing, the amount of financing required is 2.0 billion yuan RMB.