Evergreen Valley Avocado Estates — Investment Return Analysis
The following table illustrates the impact of key variable changes on the project NPV:
Section 17 · Business Plan
Investment Return Analysis
The following table illustrates the impact of key variable changes on the project NPV:
10-Year IRR
22.4%
With an R38.2 million NPV at a 14% WACC and a 5.3-year undiscounted payback on the R70 million investment.
17.1 Key Return Metrics
| Metric | Value |
|---|---|
| Total Investment Required | R70,000,000 |
| Payback Period (undiscounted) | 5.3 years |
| Internal Rate of Return (IRR) – 10-year | 22.4% |
| Net Present Value (NPV) @ 14% WACC | R38,200,000 |
| Return on Equity (Year 5) | 29.1% |
| Return on Equity (Year 7) | 26.0% |
| EBITDA Multiple at Year 7 (EV/EBITDA) | 1.8x |
| Debt Service Coverage Ratio (Year 5) | 3.3x |
17.2 Sensitivity Analysis
The following table illustrates the impact of key variable changes on the project NPV:
| Scenario | Variable Change | NPV Impact (R’000) | IRR |
|---|---|---|---|
| Base Case | As modelled | 38,200 | 22.4% |
| Price decrease | Farm-gate price –10% | 24,100 | 18.1% |
| Price increase | Farm-gate price +10% | 52,300 | 26.5% |
| Yield decrease | Yield per hectare –15% | 19,800 | 16.8% |
| Yield increase | Yield per hectare +10% | 48,500 | 25.2% |
| Cost increase | Operating costs +15% | 30,400 | 19.9% |
| Combined downside | Price –5%, Yield –10%, Cost +10% | 12,600 | 14.8% |
| Combined upside | Price +5%, Yield +10%, Cost –5% | 58,700 | 28.1% |
The project maintains a positive NPV and IRR above the cost of capital under all individual stress scenarios and under the combined downside case, demonstrating the robustness of the investment proposition.
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