After having spent two years of your only life to study business administration you feel ready to start your own enterprise. Fortunately your...
Having learned something about work load, youplan to hire a permanent worker that costs you 2000 Euro/month. Medical treatment is up to 5000€ per year. The marketing will be done by yourself.
- Apply the NPV model to evaluate your investment idea.
- Annually you would like to take out as cash payments a total of 24000€ to cover your living expenses. Is it possible to follow this consumption plan without jeopardizing your minimum required return?
- Describe and value two ideas to increase your business results.
- Explain how each parameter contributes to overall riskiness of your adventure.
After having spent two years of your only life to study business administration you feel ready to start yourown enterprise. Fortunately your grandmother has left you a farm with a plot of land, comprising 200.000sqm. To make use of your property you decided to become a slow moving farmer.In this context your best friends have raised the idea to start with goats (Nanny Goats), bees and chicken.After weeks of careful investigations you came to an investment plan:Milk Goats (units)Honey Bees (swarms)Chicken (units)Number1050500Price Unit100 Euro50 Euro10 EuroFencing4.800 Euro5.600 EuroShelter5.000 Euro5.000 Euro5.000 EuroMechanical Assistance6.000 EuroProduction Equipment10.000 Euro5.000 EuroAC2.500 Euro2.500 EuroAfter drowning your worries you start thinking of the economics of your idea: A goat is expected toproduce 31 of milk per day, you would need 101 of milk to produce 1kg of high quality cheese. Per kg ofcheese you expect revenues of 35 Euro. To dress it nicely you plan to spend 2 Euro per kg.A swarm of high quality honeybees can produce an average of 100kg honey per year. The sales price onlocal markets is at 5,00 Euro per 250g. You calculate the production costs to be 2 Euro per kg.The chicken you have chosen to start with produce at an average 300 eggs per year. The price per egg isat 0.30 Euro. To keep the chicken happy and healthy you need 200g dry food per day. A 50kg bag costyou 20 Euro. To present the eggs appropriately you calculate a luxury egg box which costs you 0,50 Euroeach.