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Vermicompost

1.0 Introduction

Earthworms vermicompost is proving to be highly nutritive ‘organic fertilizer’ and more powerful “growth promoter” over the
conventional composts and a ‘protective’ farm input (increasing the physical, chemical & biological properties of soil, restoring &
improving its natural fertility) against the “destructive” chemical fertilizers which has destroyed the soil properties and decreased its
natural fertility over the years. Vermicompost is rich in NKP (nitrogen 2-3%, potassium 1.85-2.25% and phosphorus 1.55-2.25%),
micronutrients, beneficial soil microbes and also contain ‘plant growth hormones & enzymes’. It is scientifically proving as ‘miracle
growth promoter & also plant protector’ from pests and diseases. Vermicompost retains nutrients for long time and while the
conventional compost fails to deliver the required amount of macro and micronutrients including the vital NKP to plants in shorter
time, the vermicompost does.
1.1 PROJECT RATIONALE
MARKET POTENTIAL

Vermicomposting is a type of composting in which certain species of earthworms are used to enhance the process of organic
waste conversion and produce a better end-product. It is a mesophilic process utilizing microorganisms and earthworms. Earthworms
feeds the organic waste materials and passes it through their digestive system and gives out in a granular form (cocoons) which is
known as vermicompost.

Simply speaking, vermicompost is earthworm excrement, called castings, which can improve biological, chemical, and
physical properties of the soil. The chemical secretions in the earthworm’s digestive tract help break down soil and organic matter, so
the castings contain more nutrients that are immediately available to plants.

1.2 Background and Purpose of the Project

The purpose of this project is to promote organic fertilizer as part of new practices of farming and to provide information about
worm or vermi composting with an emphasis on intensive low acreage organic food production in bed systems or protected
cultivation.

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2.0 MARKETING ASPECT

2.1 MARKET ASSESMENT

2.1.1 Demand and Supply Analysis

DEMAND

Historical Demand for Vermicompost in (San Ildefonso, Bulacan) (in kgs.)

Year 2011 2012 2013 2014 2015


VERMICOMPOST 5,000 6,050 7,980 9,000 10,400

Source : Based on the data we gathered on two farms of Vermi Compost in San Ildefonso, Bulacan

Projected Demand for Vermicompost in (San Ildefonso, Bulacan) (in kgs.)

YEAR 2018 2019 2020 2021 2022

VERMICOM- 20,000 21,500 22,300 23,800 24,750


POST

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YEAR 2023 2024 2025 2026 2027

VERMICOM- 25,950 26,900 28,990 29,500 31,000


POST

SUPPLY

Historical Supply for Oyster Mushroom in (Basuit, San Ildefonso,Bulacan) (in kgs.)

YEAR 2011 2012 2013 2014 2015

VERMICOM- 4,200 5,420 6,380 8,470 9,990


POST

Source : Based on the data we gathered on two farms of Oyster Mushroom in San Ildefonso, Bulacan

Projected Supply for Oyster Mushroom in (San Ildefonso,Bulacan) for ten years in (kgs.)

YEAR 2018 2019 2020 2021 2022

VERMICOM- 19,000 19,990 20,500 21,300 22,100


POST

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YEAR 2023 2024 2025 2026 2027

VERMICOM- 23,110 24,020 25,670 26,100 27,500


POST

DEMAND AND SUPPLY ANALYSIS

2018 2019 2020 2021 2022

Demand 20,000 21,000 22,300 23,800 24,750

Supply 19,000 19,990 20,500 21,300 22,100

Gap/deficit 1,000 1,510 1,800 2,500 2,650


Total

2023 2024 2025 2026 2027

Demand 25,950 26,900 28,990 29,500 31,000

Supply 23,110 24,020 25,670 26,100 27,500

Gap/deficit 2,840 2,880 3,320 3,400 3,500


Total

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The price of our product vermicompost is just the same as the price of our competitors which is 190.00 per kilogram.

FARM PRODUCT PRICE PER KG


ABC Farm Vermicompost 200 per kilo
(Basuit, San Ildefonso,
Bulacan)
DEF Farm Vermicompost 200 per kilo
(Sumandig, San Ildefonso,
Bulacan)

2.1.3 Consumer/Client Analysis

Based on the survey and distributed questionnaire, majority of the consumer of vermicomposting are those who are engaged in
business that uses organic fertilizer, 60% of the consumer are engaged in organic farming while 30% are the inorganic farming and
10% are in the backyard garden.

The flow of distribution is from producers, to wholesalers and then retailers and lastly the consumers.

1. Vermicompost producer wholesaler/Commission Agent -----> Retailer -----> Consumer


2. Vermicompost producer-----> Wholesaler/Commission Agent -----> Consumer
3. Vermicompost producer -----> Retailer -----> Consumer and
4. Vermicompost producer -----> Consumer
2.3 Market Prospects

The propose business will be establish at Gabihan, San Ildefonso, Bulacan. The target market will be the market to the barangay’s
of San Ildefonso that engage to organic farming.

The selected barangay in Bulacan will be on Gabihan, San Ildefonso , Bulacan have a total of approximately 5 sellers.

2.3 Marketing Program

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2.3.1 Product Feature/Design

Our product is Vermi Compost, it easy to produce and the raw material is available in our natural resources. It also helps the plant
to produce good quality of yields.

It contains nutrients that plant can benefit more (nitrogen 2-3%, potassium 1.85-2.25% and phosphorus 1.55-2.25%)

The packaging strategy of vermicompost are simply put in plastic (polythene) with nutrition facts with our logo’s.

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The logo shows the name of the business and the product it offers. It is colored green to show abundance and being environmentally-
friendly. It is circular in shape to show the earth which initially measures a firm’s success; process, product and personnel.

2.3.2 Pricing Scheme

The proposed project business VermiCompost production will range at the price P190.00 per kilogram.

No. of VermiCompost (kg) Price


1 190.00
2 380.00
3 570.00
4 760.00

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5 950.00
6 1,140.00
7 1,330.00
8 1,520.00
9 1,710.00
10 1,900.00

Price Comparison with Competitors

The price of competitor in kilogram is the same as in our price.

Price Comparison
Price per kilogram
ABC Farm 200.00
DEF Farm 200.00
2.3.3 Promotion and Advertisement

The producer will be providing pliers regarding the nutrients derived from vermicompost products and distribute it to potential
customers. This is to create awareness about vermicompost and the effects of vermicompost in plants.

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2.3.4 Product Distribution Strategies

The marketing of vermicompost follows the traditional distribution channel, through middleman or wholesalers at farm to
identifies potential buyers and negotiate price, or directly to retailers in rural markets.

Production Process Flow

Collect raw material

Chopped the sheathing leafstalks of


banana

Add carabao manure

Add kakawate leaves or ipil – ipil


leaves

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Add the earthworm

Repeat the second steps

Watered the compost

Covered it and watered it everyday

Several days you add again carabao


manure

After 1 month you can harvest

The first step is to collect all raw materials, second steps chopped the sheathing leafstalks of banana, third step you put the
carabao manure in the top of the sheathing leafstalks of banana, fourth step put kakawate leaves at the top of the carabao manure, fifth
step put some earthworm in the top of the kakawate leaves, sixth step then repeat it again the second step, seventh step watered the

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compost, eigth step covered it, and water it everyday then after several days you add again carabao manure and after 1 month you can
now harvest the compost.

2.3.5 Target Market Share and Profit Objectives

The major target market during the first year of operation would be the wholesaler, retailer in San Ildefonso. If the Vermicompost
supply exceeds the demand in San Ildefonso, the business would be targeting wholesalers and retailers in the nearby town.

PROJECTED PROJECTED UNFILLED MARKET


YEAR
DEMAND SUPPLY DEMAND SHARE

1 20,000 19,000 1,000 10%

2 21,000 19,990 1,510 10%

3 22,300 20,500 1,800 10%

4 23,800 21,300 2,500 10%

5 24,750 22,100 2,650 10%

6 25,950 23,110 2,840 10%

7 26,900 24,020 2,880 10%

8 28,990 25,670 3,320 10%

9 29,500 26,100 3,400 10%

10 31,000 27,500 3,500 10%

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Project demand - Unfilled Demand

Unfilled Demand/ Project demand x 100 = Market Share

Projected ROI = 15.55 %

Projected ROE = 24.18%

Projected Net Profit Margin = 23.32 %

3.0 Technical Aspect


3.1 Plant/Farm Description and Location

The proposed project area is propose location had been chosen by the proponent considering such as factors as the availability of
resources, accessibility to the potential customer location cost and the environment of the business.

According to the nature of the propose project, which is in line with the production type of business, is non residential area has
been the prime consideration of the proponents in choosing the site of the business.

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Figure vicinity map of the propose Vermicompost

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VERMICOMPOST FARM LAYOUT
Shreddering Weighing &
Vermi Bed Bagging
Area Area

PATH WAY
Chopping
Area Filterring
Vermi Bed Area

3.2 Product(s) & Production Schedule

The proposed business vermicompost falls under the production type of the business providing the wholesalers and retailers for their
selling purposes of organic fertilizers particularly those who need organic fertilizers in their farming business in different farms in
Bulacan and other nearby farms vermicompost will established 1200 kg. per year.

YEAR TARGET VOLUME Per (Kg) YEAR

2018 19,000kg.

2019 19,990kg.

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2020 20,500kg.

2021 21,300kg.

2022 22,100kg.

2023 23,110kg.

2024 24,020kg.

2025 25,670kg.

2026 26,100kg.

2027 27,500kg.

TOTAL 209,300kg.

3.3 Production Process


Collect raw material

Chopped the sheathing leafstalks of


banana
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Add carabao manure

Add kakawate leaves or ipil – ipil


leaves

Add the earthworm

Repeat the second steps

Watered the compost

Covered it and watered it everyday

Several days you add again carabao


manure
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After 1 month you can harvest

The production process of Vermicompost is from earthworm, chop the banana leaf stalk, second add the animal manure, kakawate or
ipil-ipil leaves and the earthworm, repeat the second steps and covered the area then watered everyday, after several days add again
carabao manure. Month later, Vermicompost are ready to harvest and packaging. Then it will be delivered to market. 3.4

3.4 Fixed Assets and Facilities

Vermi Compost Production fixed asset are one building with only one room for the processing and all the process in this room is
done composting, mixing machine, packaging machine and conveyor machine composting, chopping, soaking area, sterilization area,
cooling area, inoculation area, incubation area, growing area. They will use close van to transport or deliver the products to the
market.

3.5 Raw Materials and Other Key Inputs

Our raw materials is easy to get , because it can find in our

3.6 Waste Disposal System

Vermicompost is an Eco – friendly business because the waste itself is our raw material.

4.0 ORGANIZATIONAL AND MANAGEMENT ASPECT

4.1 Management During the Pre-operating Period

Activities to be conducted:

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 Conducting of Feasibility Study
 Planning Stage
 Acquisition of funds
 Registration/ Legal Papers Arrangement
 Dealing with the Spawn Suppliers
 Buying of Location site
 Preparation for construction
 Establishment of Building
 Training of Staff/ Operating Personnel
 Purchasing of Operation Supply
 Advertising

4.2 Management during the Operating Period

4.2 Type of Organization

The project will adopt a sole proprietorship type of business organization. The production was founded by Maribeth Sta. Cruz
Cruz who were thinking for a great business where she can invest her savings, due to high and easy production of vermicompost.
The possible opportunities attract wholesalers and retailers that is why the production was formed.

4.2.2 Organizational Set-Up

Vermicompost Production will implement a democratic style of management. This means that employees will have privilege and
will be allowed to participate in the decision making concerning the production process.

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ORGANIZATIONAL SET-UP

Manager

Sales Manager

Laborers Driver

4.2.3 Job Description and Job Specification

Position Qualification Duties and Responsibility

General Manager -Must possess excellent The Owner/General Manager


communication and leadership will be the one to plan,
skills - organize, lead and control the
Must have strong and pleasing daily operations of the
personality business.
-Willing to work even in
weekends and holidays-
Knows how to manage a
business and has the potential
of enhancing the business

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-Must have a background
knowledge on mushroom
cultivation .

Sales Manager -Must be a graduate of any Responsible for the overall


four years accounting-related financial activities in the
course business.

-Must be computer literate

-Willing to work overtime, on


weekends and holidays

-Must be honest

-Must be a partner

Driver --must be literate-at least The driver must have


finished two years in high knowledge about the location
school -With at least two of the area for the delivery of
years experience oyster mushroom. They will
be train and oriented properly.
-Patient and hardworking

Laborer must be hardworking-must The Laborers will be


have a good background in responsible for the processing,
farming and maintaining the
cleanliness of the production
-Must be facilities, while the Drivers

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willing to undergo training will be responsible in delivery
and distribution of oyster
-Must be mushroom to the customers.
literate

The proposed business will have a total of 6 persons including the General Manager, 5 laborers, and 1driver.

4.2.4 Personnel Compensation And Fringe Benefits

Position Yearly

Laborer 1 144,000

Laborer 2 144,000

Laborer 3 144,000

Laborer 4 144,000

Laborer 5 144,000

Laborer 6 144,000

Laborer 7 144,000

Laborer 8 110,000

Laborer 9 110,000

Driver 110,000

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TOTAL 1,338,000

Note: It includes the 13th Month pay.

Employee Benefits

PhilHealth, PAG-IBIG,SSS, and the 13th Month pay will be provided for all employees.

4.2.5 Others

Company Policies

In the organization, policies and principles play an important role because this helps organization to become more efficient and
effective. This will guide the whole business and help to achieve the company’s goals.

Policies and Hiring

Vermi Land Company will announce job vacancies. The proposed business will recruit and employ workers on the basis of their
qualification of work. Referrals from trusted people will also be entertained. Qualified applicants will then pass the necessary
requirements to the management such as:

 Baranggay Police and NBI Clearance


 Copy of Birth Certificate (PSA)
 Highschool/College Diploma/Form 137
 Medical Certificate
 Driver’s License

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 Resume
Policies And Days of Works

Employees will work on six(6) days a week. The compensation will be on daily basis. The employees are intended to rest once a
week.

Work Schedule

All employees are entitled to one (1) rest day. The Laborer 1 will take rest day on Saturdays and the Laborer 2 will take his rest
day on Sundays and the Laborer 3 will take his rest day on Mondays. The Driver 1 will take his rest day on Sundays.

4.2.6 Project Time Table

DATE

Conducting of Feasibility Study January 20, 2018 - February 25,2018

Planning Stage February 25, 2018- March 25, 2018

Acquisition Funds March 25, 2018 – April 26, 2018

Registration Legal Paper Agreements April 27, 2018- May 27, 2018

Dealing on Spawn Suppliers May 28, 2018 – June 29, 2018

Buying of Operating Site June 30, 2018 – July 30, 2018

Preparation of Construction July 31, 2018 – August 31, 2018

Establishment of Building September 3, 2018- September 27,2018

Hiring/Training of Staffs September 30, 2018 - October 6,2018

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Purchasing of Operating Suppliers October 7, 2018- November 10,2018

Start of Operation November 20,2018

Actions Januar Februar Marc Apri Ma Jun Jul Augus Septembe Octobe Novembe Decembe
y y h l y e y t r r r r
Conducting of
Feasibility
Study
Planning Stage
Acquisition
Funds
Registration
Legal Paper
Agreements
Dealing on
Spawn
Suppliers
Buying of
Operating Site
Preparation of
Construction
Establishment
of Building
Hiring/Trainin
g of Staffs
Purchasing of
Operating
Suppliers
Start of
Operation

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5.0 FINANCIAL ASPECT

5.1 TOTAL PROJECT COST

This project needs a capital investment amounting to ₱1,227,571.00 broken down as it follows:

Fixed Asset:

Machinery ₱175,000.00

Delivery Equipment ₱300,000.00

Buildings and Facilities ₱250,000.00

Land ₱500,000.00

Total fixed asset ₱1,225,000.00

Current Assets

Inventories:

Raw Materials ₱700,000.00

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Inventory related Cost:

Maintenance ₱10,000.00

Intangible Assets:

Licenses ₱3,000.00

Organization and pre-operating expense ₱4,000.00

Salaries/ Wages ₱1,338, 000.00

Advertisement ₱20, 000.00

Utilities Expense ₱5,000.00

Total Current Assets ₱1, 537,771.00

Cash on Hand ₱153,500.00

Total Project Cost ₱2, 762,771.00

5.2 Financing Scheme and Sources

Stockholders Investment : 1, 762,771.00

Bank Loans : 1, 000,000.00

Total : 2, 762,771.00

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Financing Source : 74% Vermi Compost

: 26% Land Bank of the Philippines

Hurdle Rate : 11% per annum

Term of Loan : 5 years

5.3 List of Financial Assumption

1. Sales are assumed to increase 5% annually.


2. Cost of raw materials are assumed to increase 5% annually.
3. Utilities expense are assumed to increase 5% annually.
4. Delivery expense are assumed to increase 5% annually.
5. Audit Fees/Permit Licenses are assumed to increase 5% annually.

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3JRIK OYSTER MUSHROOM PRODUCTION
PROJECTED INCOME STATEMENT
FOR YEARS ENDED 2018-2027

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Sales 3,610,000.00 3,798,100.00 3,895,000 4,047,000 4,199,000 4,390,900 4,563,800 4,877,300 4,959,000 5,225,000
Less: Cost of
Sales 700,000 735,000 771,750 810,333.50 850,850.18 893,392.68 938,062.31 984,965.43 1,034,213.70 1,085,924.39

Gross Profit 2,910,000 3,063,100 3,123,250 3,236,666.50 3,348,149.82 3,497,507 3,625,737.69 3,892,334.57 3,924,786.30 4,139,075.61
Less:
Operating
Expenses

Depreciation
Expense
Machineries 15,750 15,750 15,750 15,750 15,750 15,750 15,750 15,750 15,750 15,750

Depreciation
Expense-
Delivery
Equipment 27,000 27,000 27,000 27,000 27,000 27,000 27,000 27,000 27,000 27,000

Depreciation
Expense-
Building and
Facilities 22,500 22,500 22,500 22,500 22,500 22,500 22,500 22,500 22,500 22,500
Maintenance
Cost 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000

Advertisement 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000

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Delivery
Expense 10,000 10,500 11,025 11,576.25 12,155.06 12,762.82 13,400.96 14,071 14,774.55 15,513.28
Salaries
Expense 1,338,000 1,338,000 1,338,000 1,338,000 1,338,000 1,338,000 1,338,000 1,338,000 1,338,000 1,338,000
Utilities 5,000
Expense 5,250 5,512.50 5,788.13 6,077.53 6,381.41 6,700.48 7,035.50 7,387.28 7,756.64
Other
Expenses

Pre-operating
Expenses 4,000 ₱- ₱- ₱- ₱- ₱- ₱- ₱- ₱- ₱-
Audit
Fees/Permit
Licenses and
Fees 3,000 3,150 3,307.50 3,472.88 3,646.52 3,828.84 4,020 4,221 4,432.37 4,653.98
Total 1,455,250 1,452,150 1,453,095 1,454,087 1,455,129 1,456,223 1,457,372 1,458,578 1,459,844 1,461,174

Earning
Before
Income Tax 1,454,750.00 1,610,950.00 1,670,155 1,782,579.50 1,893,021 2,041,284 2,168,365.69 2,433,756.57 2,464,942.30 2,677,901.61

Less: Income
Tax (25%) 363,688 402,737.50 417,538.75 445,644.75 473,255 510,321 542,091.42 608,439.14 616,235.58 669,475.40

Net Income 1,091,062 1,208,212.50 1,252,571.25 1,336,934.75 1,419,766 1,530,963 1,626,274.27 1,825,317.43 1,848,706.72 2,008,426.21

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3JRIK OYSTER MUSHROOM SPRODUCTION

PROJECTED BALANCE SHEET

Assets 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Current Assets

Cash 153,500.00 570,875.00 1,058,656.25 1,617,214.06 2,250,087.26 2,960,991.62 3,753,828.70 4,632,695.14 5,601,892.40 6,665,937.02

Raw Materials 700,000.00 735,000.00 771,750.00 810,337.50 850,854.38 893,397.09 938,066.95 984,970.30 1,034,218.81 1,085,929.75

Total Current
Assets 853,500.00 1,305,875.00 1,830,406.25 2,427,551.56 3,100,941.64 3,854,388.71 4,691,895.65 5,617,665.44 6,636,111.21 7,751,866.77

Non-Current
Assets

Machinery 175,000.00 175,000.00 175,000.00 175,000.00 175,000.00 175,000.00 175,000.00 175,000.00 175,000.00 175,000.00
Acc.Dep.
Machinery (15,750.00) (31,500.00) (47,250.00) (63,000.00) (78,750.00) (94,500.00) (110,250.00) (126,000.00) (141,750.00) (157,500.00)
Delivery
Equipment 300,000.00 300,000.00 300,000.00 300,000.00 300,000.00 300,000.00 300,000.00 300,000.00 300,000.00 300,000.00
Acc.Dep.
Delivery
Equipment (27,000.00) (54,000.00) (81,000.00) (108,000.00) (135,000.00) (162,000.00) (189,000.00) (216,000.00) (243,000.00) (270,000.00)

Building and
Facilities 250,000.00 250,000.00 250,000.00 250,000.00 250,000.00 250,000.00 250,000.00 250,000.00 250,000.00 250,000.00
Acc.Dep.
Building and
Facilities (22,500.00) (45,000.00) (67,500.00) (90,000.00) (112,500.00) (135,000.00) (157,500.00) (180,000.00) (202,500.00) (225,000.00)

Land 500,000.00 500,000.00 500,000.00 500,000.00 500,000.00 500,000.00 500,000.00 500,000.00 500,000.00 500,000.00

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Total Non-
current Assets 1,159,750.00 1,094,500.00 1,029,250.00 964,000.00 898,750.00 833,500.00 768,250.00 703,000.00 637,750.00 572,500.00

Total Assets 2,013,250.00 2,400,375.00 2,859,656.25 3,391,551.56 3,999,691.64 4,687,888.71 5,460,145.65 6,320,665.44 7,273,861.21 8,324,366.77
Liabilities
Income Tax
Payable 136,625.00 159,931.25 417,538.75 445,644.75 473,255.00 510,321.00 542,091.42 608,439.14 616,235.58 669,475.40

Loans payable 1,000,000.00 800,000.00 600,000.00 400,000.00 200,000.00 ₱- ₱- ₱- ₱- ₱-

Interest Payable 110,000.00 110,000.00 110,000.00 110,000.00 110,000.00 ₱- ₱- ₱- ₱- ₱-

Total liabilities 1,246,625.00 1,312,737.50 1,127,538.75 955,644.75 783,255.00 510,321.00 542,091.42 608,439.14 616,235.58 669,475.40
Owners Equity

Capital 766,625.00 1,087,637.50 1,732,117.50 2,435,906.81 3,216,436.64 4,177,567.71 4,918,054.23 5,712,226.30 6,657,625.63 7,654,891.37
Total Owners
Equity 766,625.00 1,087,637.50 1,732,117.50 2,435,906.81 3,216,436.64 4,177,567.71 4,918,054.23 5,712,226.30 6,657,625.63 7,654,891.37
Total Liabilities
and Owners
Equity 2,013,250.00 2,400,375.00 2,859,656.25 3,391,551.56 3,999,691.64 4,687,888.71 5,460,145.65 6,320,665.44 7,273,861.21 8,324,366.77

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5.5

5.5 FINANCIAL ANALYSIS

5.5.1 and 5.5.2 BC SCHEDULE AND MEASURES OF PROJECT WORTH


Name of the proposed project : 3JRIK Oyster Mushroom Production
Project Proponent : 3JRIK Oyster Mushroom Production
Location : Umpucan, San Ildefonso, Bulacan
Initial Capital Outlay : ₱3,900,000.00
Financing Source : 74% 3JRIK Oyster Mushroom Production
26% Land Bank of the Philippines
Cost of Capital or Hurdle Rate : 11% per annum

Projected Benefits and Costs Stream :

Year Gross Benefits Gross Cost Net Benefits


2017 0 2, 762,771.00 (2, 762,771.00)
2018 3,610,000.00 2,518,938.00 1,091,062.00
2019 3,798,100.00 2,589,887.50 1,208,212.50
2020 3,895,000 2,642,428.75 1,252,571.25
2021 4,047,000 2,710,065.25 1,336,934.75
2022 4,199,000 2,779,234.00 1,419,766
2023 4,390,900 2,859,937.00 1,530,963
2024 4,563,800 2,937,525.73 1,626,274.27
2025 4,877,300 3,051,982.57 1,825,317.43
2026 4,959,000 3,110,293.28 1,848,706.72
2027 5,225,000 3,216,573.79 2,008,426.21

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Measures of Project Worth
BCR at 11% = 1.52%
NPW at 11% = 3.05%
NPW at 25% = -0.57%
PI at 11% = 3.05%
IRR = 22.80%
PP = 1.82

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5.5.3 FINANCIAL SENSITIVITY TEST

GROSS NET
BENEFIT GROSS BENEFIT
YEAR (GB) COST (GC) (NB) DGB @11% DGC @11% DNB @11% DNB @25%

0 2, 762,771.00 (2,762,771.00) 0 2, 762,771.00 (2,762,771.00) (2,762,771.00)


1,091,062.00
1 3,610,000.00 2,518,938.00 3,252,252.25 2,269,313.51 982,938.00 872,849.00
1,208,212.50
2 3,798,100.00 2,589,887.50 3,082,623.16 2,102,010.79 980,612.00 773,256.00
1,252,571.25
3 3,895,000.00 2,642,428.75 2,847,990.43 1,932,121.13 915,869.00 641,316.00
1,336,934.75
4 4,047,000.00 2,710,065.25 2,665,884.25 1,785,203.92 880,680.00 547,608.00
1,419,766
5 4,199,000.00 2,779,234.00 2,491,902.13 1,649,340.11 842,562.00 465,228.00
1,530,963
6 4,390,900.00 2,859,937.00 2,347,554.45 1,529,039.11 818,515.00 401,332.00
1,626,274.27
7 4,563,800.00 2,937,525.73 2,198,192.66 1,414,883.97 783,308.00 341,054.00
1,825,317.43
8 4,877,300.00 3,051,982.57 2,116,389.70 1,324,336.10 792,053.00 306,237.00
1,848,706.72
9 4,959,000.00 3,110,293.28 1,938,595.94 1,215,890.69 722,705.00 248,129.00
2,008,426.21
10 5,225,000.00 3,216,573.79 1,840,163.90 1,132,827.36 707,336.00 215,653.00

Total 43,565,100.00 28,416,865.87 15,148,234.13 24,781,548.87 16,354,966.71 8,426,578.00 4,812,662.00

36
A. Assumption #1
What if Gross Cost increase by 1% during the actual operating period (Year 1-10) ; gross benefits remains the same as forecasted.

ADJUSTED B/C SCHEDULE (based on Assumption #1)

YEAR GB GC NB DNB @11% DNB @25%

0 (2,762,771.00) (2,762,771.00)

1 3,610,000.00 2,554,127.38 1,055,872.62 951,236.59 844,698.10

2 3,798,100.00 2,615,786.38 1,182,313.63 961230.59 756,680.72

3 3,895,000.00 2,668,853.04 1,226,146.96 894,997.78 627,787.24

4 4,047,000.00 2,737,165.90 1,309,834.10 861,732.89 536,508.10

5 4,199,000.00 2,807,026.34 1,391,973.66 823,653.05 456,121.90

6 4,390,900.00 2,888,536.37 1,502,363.63 803,403.01 393,835.64

7 4,563,800.00 2,966,900.99 1,596,899.01 767,739.91 334,893.97

8 4,877,300.00 3,082,502.40 1,794,797.60 780,346.78 301,117.09

9 4,959,000.00 3,141,396.21 1,817,603.79 710,001.48 243,954.64

10 5,225,000.00 3,248,739.53 1,976,260.47 695,866.36 212,199.30

Total 2.986207854 (1.704012385)

37
NPW @ 11%
=

2.986207854

NPW @25%
=
(1.704012385)

IRR =
19.93%

38
B. Assumption #2

What if there will be a 1% shortfall in Gross Benefit yearly due to drop selling price; Gross Costs remains

the same as budgeted.

ADJUSTED B/C SCHEDULE (based on Assumption #2)

YEAR Gross Benefit (GB) Gross Cost (GC) Net Benefit (NB) DNB @ 12% DNB @ 4%

0 2,762,771.00 (2,762,771.00) 2,762,771.00 (2,762,771.00)


1 3,573,900.00 2,518,938.00 1,054,962.00 941,930.36 753,544.29
2 3,418,119.00 2,589,887.50 828,231.50 660,261.08 422,567.09
3 3,856,050.00 2,642,428.75 1,213,621.25 863,831.63 442,281.80
4 4,006,530.00 2,710,065.25 1,296,464.75 823,926.79 337,480.41
5 4,157,010.00 2,779,234.00 1,377,776.00 781,787.10 256,176.00
6 4,346,991.00 2,859,937.00 1,487,054.00 753,387.84 197,496.10
7 4,518,162.00 2,937,525.73 1,580,636.27 714,999.58 149,946.28
8 4,828,527.00 3,051,982.57 1,776,544.43 717,516.50 120,379.29
9 4,909,410.00 3,110,293.28 1,799,116.72 648,779.53 87,077.71
10 5,172,750.00 3,216,573.79 1,956,176.21 629,836.39 67,628.17

Total 2.727789158 (1.02599062)

NPW @12% = 2.727789158


NPW @4% = -1.02599062
IRR = 9.81%

39
Assumption #3

What if there will be a 1% shortfall in Gross Benefits and 1% cost overrun during the actual operating period

(simultaneous occurrence).

ADJUSTED B/C SCHEDULE (based on Assumption #3)

Gross Benefit
YEAR Gross Cost (GC) Net Benefit (NB) DNB @ 11% DNB @ 25%
(GB)

0 2,762,771.00 (2,762,771.00) 2,762,771.00 (2,762,771.00)


1 3,573,900.00 2,554,127.38 1,019,772.62 918,714.07 815,818.10
2 3,418,119.00 2,615,786.38 802,332.62 652,302.94 513,492.88
3 3,856,050.00 2,668,853.04 1,187,196.96 866,567.12 607,844.84
4 4,006,530.00 2,737,165.90 1,269,364.10 835,107.96 519,931.59
5 4,157,010.00 2,807,026.34 1,349,983.66 798,806.90 442,362.40
6 4,346,991.00 2,888,536.37 1,458,454.63 779,922.26 382,325.16
7 4,518,162.00 2,966,900.99 1,551,261.01 745,798.56 325,282.05
8 4,828,527.00 3,082,502.40 1,746,024.60 759,141.13 292,934.34
9 4,909,410.00 3,141,396.21 1,768,013.79 690,630.39 237,298.78
10 5,172,750.00 3,248,739.53 1,924,010.47 677,468.48 206,598.77
Total 2.79591027 (1.57229423)

NPW @11% = 2.795910273


NPW @25% = -1.572294233
IRR = 19.96%

40
41
6.0 SOCIO-ECONOMIC ASPECT

42