Answer:

Evaluating the Feasibility of a Kaatoan Bangkal Plantation

The proposed project is to establish a kaatoan bangkal plantation to support a pulp and paper mill in Mindanao. At its rotation age of 5 years, the estimated yield is 125m3/ha and the cost of establishment is PhP 20,000/ha. Maintenance and protection costs are estimated to be PhP 2,000/ha/year from the first year until the 5th year. The stumpage price of kaatoan bangkal is PhP 700/ m3, and a discount rate of 15% per annum is used for evaluation.

Net Present Value (NPV)

The Net Present Value (NPV) of the kaatoan bangkal plantation project is calculated by subtracting the total present value of costs from the total present value of benefits. The present value of benefits is the stumpage price of kaatoan bangkal, discounted at a rate of 15% per annum, multiplied by the estimated yield of 125m3/ha. The present value of costs is calculated by summing the establishment cost and the discounted maintenance and protection cost over the 5-year rotation period.

Internal Rate of Return (IRR)

The Internal Rate of Return (IRR) of the kaatoan bangkal plantation project is calculated by finding the discount rate at which the NPV of the project is equal to zero. A positive NPV indicates that the project has a positive return and is financially feasible.

Conclusion

The feasibility of the kaatoan bangkal plantation project can be evaluated by calculating the NPV and IRR, using the estimated yield of 125m3/ha, stumpage price of kaatoan bangkal of PhP 700/m3, establishment cost of PhP 20,000/ha, and maintenance and protection cost of PhP 2,000/ha/year. Both the NPV and IRR must be positive for the project to be financially viable.

Related Questions:

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