ACA-TM-37 (v2.2-20-Nov-10 ) Case Exercise of MI Project.

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ACA-TM-37 (v Nov-10 ) Case Exercise of MI Project

ACA-TM-37 (v Nov-10 ) A farmer having a water source like open well or canal nearby would like to invest on a pump-set to lift the water. Presently, he is cultivating only single crop and getting a net benefit of Rs.3,000/- per year. 2. On installation of pump-set, it would be possible to take two crops with some additional expenditure.During the first year production, expenditure is estimated as rs.4500/- for single crop, with a projected benefit if Rs.8,000/-. 3. Second year onwards, it is assumed that the farmer would take up 2 crops in a year with the production expenditure of Rs.7,000/- and a benefit of Rs.12,000/- Minor Irrigation Project

ACA-TM-37 (v Nov-10 ) Project cost: Rs.6000 i.e cost of pump-set Installation of pump-set to lift water Particulars1 st Year2 nd Year onwards Prod. Cost Rs.4,5007,000 Pre Dev. Income Rs.3,000 Total Cost7,50010,000 Benefits Rs8,00012,000 Gestation period: 6 months Useful life of pump-set: 9 yeras

ACA-TM-37 (v Nov-10 ) Cash Flow Statement Year01st2nd3rd4th5th6th7th8th9th Cost Benefit Net benefit (-) Total net benefit: Rs. 16,500 Total investment: Rs.6,000

ACA-TM-37 (v Nov-10 ) Calculation of NPW and BCR Year0 yr1st2nd3rd4th5th6th7th8th9th Cost Bene fit Net bene fit % Present value of net benefit Present value of net benefit:Rs.8239 Investment:Rs.6000

ACA-TM-37 (v Nov-10 ) Calculation of NPW and BCR Year0 yr1 st year2 nd to 9 th year Cost Benefit Net Benefit(-) Disc Cost PWC=51545 Disc Benefit PWB=53784 NPW=PWB-PWC= =2239 BCR=PWB/PWC=53784/ :1

ACA-TM-37 (v Nov-10 ) Calculation of IRR Year0 year1 st year2-9 year Cost Benefit Net Benefit(-) % IRR = 20+5 *813/813-(-)274= 20+5*813/1087=