1.

Statement of the problem---------------------------------------------------------------------------

2. EXECUTIVE SUMMERY-----------------------------------------------------------------------

3. BACK GROUND----------------------------------------------------------------------------------
4 . LOCATION, SITE OF PROJECT AND ENVIRONMENT----------------------------

4.1 PROJECT LOCATION---------------------------------------------------------------------

4.2 SITE OF THE PROJECT----------------------------------------------------------------------

4.3 Scope of the project----------------------------------------------------------------------------

5. Possible Parties and Target Group ---------------------------------------------------------------

6. Goal and objective of the project------------------------------------------------------ ------------

7. Project out put------------------------------------------------------------------------------------------

8. Possible risks-------------------------------------------------------------------------------------------

9. Duration of the period---------------------------------------------------------------------------------

10. Implementation of project----------------------------------------------------------------------------

11. Estimated cost of the project---------------------------------------------------------------------

12. Feasibility of the project-----------------------------------------------------------------------------

12.1 Demand Analysis-----------------------------------------------------------------------------------------

12.2 Supply Analysis----------------------------------------------------------------------------------

12.3 Market analysis-----------------------------------------------------------------------------------

12.4 Social feasibility----------------------------------------------------------------------------------

12.5 Economic feasibility--------------------------------------------------------------

12.6 Environmental feasibility----------------------------------------------------------------------

13. Source of finance --------------------------------------------------------------------------------

13.1 fund allocation----------------------------------------------------------------------------------

 13.2 planned investment----------------------------------------------------------------------------

13.2.1 building and construction -----------------------------------------------------------

13.2.2 agricultural machinery and equipment--------------------------------------------

13.3 poultry project revenue project---------------------------------------------------------------

13.4 operation cost estimates-------------------------------------------------------------------------

13.5 loan repayment schedule-------------------------------------------------------------------------

13.6 repair and maintenance costs--------------------------------------------------------------------

13.7 depreciation schedule-------------------------------------------------------------------------------

13.8 project income statement---------------------------------------------------------------------------

13.9 project cash flow statement-------------------------------------------------------------------------

13.10 project balance sheet--------------------------------------------------------------------------------

14. appraisal criteria(viability indicators)------------------------------------------------------------------------

15.monitoring and evaluation--------------------------------------------------------------------------------------

16. references------------------------------------------------------------------------------------------------------------
1. Name of the project: Arerti small scale commercial poultry project

2. Owner of the project: Wodere Manyazewal

3. Location: Arerti Kebele 02

A, country: Ethiopia

B, contact person: Wodere

Designation: ermias kifile

Address: Minjar shenkora

Tel:0918104078

Fax:……………………….

E-mail: Ermias kifile@gmail.com

Total cost of the project: 6,435,450 Birr

A Five Years Analysis

May. 26/05/2017 GC.
1. Statement of the problem
As we know Ethiopia is potentially rich country in animal and animal products which makes
it to be ranked as the 10th country in the World and the 3rd in Africa. However, the nation is not
benefiting from its potential resources basically because of the hindering factors like less
advanced and less competitive market mechanisms.so polluter is the most common and favorable
animal product which is play the significant role for various things such as creating employees
opportunity ,to make profit ,to generating more money ,to generating foreign currency ,to
develop good diplomatic relation with other country as well as support for the development of
our country . even though poultry production have various significance, it have own problems or
challenges these are less advance, less competitive mechanism, less technological experience,
lack of skilled person as well as lack of effective utilization of poultry production. There for, by
taking the above problems in consideration we have decided to solve those problems by different
ways such as by creating awareness about the important of poultry production, increase
availability of poultry product and improving nutrition and health status of customer in arerti
town at kebele 02.

2. EXECUTIVE SUMMERY
Arerti small scale commercial poultry is a partnership business which will establish next
year in 2017 by five business men. The business intended to provide poultry product for
the local market. The company aimed to produce poultry meat and fresh quality egg to the
community, to promote implement and to contribute to the national economy by producing
and distributing poultry products, and also introducing new technology and modern way of
poultry production. Furthermore, it will create job opportunity for skilled and semi-skilled
labor.

The company’s production and main sales office is intended to be located at shiwarobit
town and also it will have four different sales office. Since the demand for poultry product
is increasing locally as well as in the foreign market the company has the aim of providing
high quality product and making profit through customer satisfaction.

The starting capital of the company estimated around 6435450 birr. The capital includes
manufacturing machine, office equipment and overhead cost. The capital is acquired from
the entrepreneurs and bank loan. The estimated study indicate that annual profit increases
every year by 10% and first year profit is expected to be 50000 before tax.
The company may face financial risks since at initial phase 1/5th of the capital is bank loan.
However, if the borrowing is not possible the company may not pursue operation. And as a
solution they will bring additional partners. The second probable risk is technological risks,
in case when the competitors import advanced technologies and machines.

The possible marketing risk is, at the time of Christian fasting the market demand will be
less. At this time reducing the production of Christian poultry and increasing the others.
On the process of poultry production the company may face risk of not getting adequate
quantity and quality input materials from local supply. To overcome this problem the
entrepreneurs intended to breed and raise animal. By providing appropriate training on
poultry production, it is possible to minimize the risk of loss.

3. BACK GROUND
Ethiopia is potentially rich country in animal and animal products which makes it to be ranked as the
10th country in the World and the 3rd in Africa. However, the nation is not benefiting from its potential
resources basically because of the hindering factors like less advanced and less competitive market
mechanisms. Exporting animals and animal products can not only generate profits to the involved
companies, but also can create hard currency (foreign exchange) for the nation. But, currently the few
companies which are exporting animal and animal products are suffering from lack of adequate finance,
proper management and loyalty problems from the side of their partners. So, by applying a legal
partnership agreement with Government and partners, raising adequate finance through time, hiring
skilled and competitive personnel to manage the activities and taking lessons of the difficulties
experienced by these import-export organizations, it is possible to make profits and generate more money
for the nation basically by fetching foreign exchange money. This business will provide a number of
significance in addition to the above one like, it will create employment opportunity, generate foreign
currency, good diplomatic relationship with other abroad countries, supports the development of Ethiopia
as well as other countries. Thus, the company will give high value for its workers and will run all its
activities in line with the rules and regulations of the country in general and the sector in particular. This
assures the existence and sustainable growth of the company through its lifespan (CSA agricultural survey
report, 2004 EC).

This project is named as YFATE BER Small holder poultry project. Though the feasibility of an
investment project largely depends on its competitiveness in the market evaluating all good opportunities
and reengineering for benefit of the project is also an important task. It should have become that the
successful project is not just reliant on sound technical input, but also on business management, finance
and law, while project skills consist of planning, estimating, monitoring and control. The environment
context in which the proposed project operates should be evaluated critically. Then making in to effect
and integrating the potential opportunities and provision of the service to the societies comes next

.4 . LOCATION, SITE OF PROJECT AND ENVIRONMENT

4.1 PROJECT LOCATION

As mentioned before the project will be located in North Shoa administrative zone. The location is chosen
for a number of reasons. Some the reasons are:-

 Growth demand of poultry product trade, social interaction and number of investors coming to the
town.

 Since the town is “industry area”, the will be a number of opportunities for business.
 The geographical location of the towns nearest to Addis Ababa.
 Availability of frequently needed raw materials at reasonable cost throughout the year.
 Besides these there are well established and accessible infrastructures in the town.
4.2 SITE OF THE PROJECT
The site location has already been identified and proposed in arerti kebele 02 which is near to Elementary
School ‘. The total command area required to implement the promoter’s idea is about 3000 square meters,
which is expected to be obtained by the permission of the town municipality as per land leasing free
directives.

The project building is intended to be located approximately 3 km away from the SHCOOL. The area is
generally in proximity to major transportation routes and away from risks and residential areas for people
safety. The proposed project site location is bordered with

 In the North to – Elementary School

 In the South to - Reserved Area
 In the West to - Farming area
 In the East to - The road

4.2 Scope of the project

  The project will undertake on small scale production of poultry farming in, North Shoa Zone, PL ,
which is 230km far apart from Addis Ababa. The site location has already been identified and
proposed in Shiwarobit keels 01 which is near to ‘Elementary school.
Vision
 “To be highly competitive and financially strong import-export company in Ethiopia by providing
quality poultry products to local and international market”
Mission
 “This business will export poultry and its products to local market and to the foreign market at a
quality and competitive manner to make profits while maintaining a competitive and attractive
employment opportunities.”

5. Possible Parties and Target Group

The target market for this project is foreign and to some extent for country consumption
especially in Shiwarobit Town.

i. Possible Partners:- the possible parties for this project include local merchants, transport
service organization,
ii. Direct Beneficiaries:- daily laborer,
iii. Direct or indirect affected parties:- No party will be affected by this project
iv. Parties to cooperate and coordinate project activities:- the main target of the project is to
export egg production and as a result transport serving agents and foreign market owners
are the major parties.

6. Goal and objective of the project

The general objective of the business is “making profits and generating hard currency for the nation by
exporting quality poultry and its products at a competitive market strategy”.

Specifically, the objectives of the company include:

 Providing quality poultry products to local and foreign markets.

 Creating employment opportunities.
 Providing practical business experience to interested groups
 Increasing the availability of poultry products
 Improving nutrition and health status of the customers
 Improve the financial capacity of low income groups
 Create market for agricultural commodities and other services.
7. Project out put
The main services and products that will be provided by the poultry project activity when it operates of its
full capacity are:-

 Poultry meat
 Eggs
 Chicks
 Natural fertilizer
 Creating employment opportunities

8. Possible risks

 Based on the proposed project size, and necessary accommodations of the project, the likely risks
that will potentially threaten the project are identified as follows;
 Personal risk; this is associated with interpersonal relation among the manager and employees in
the project area. To overcome staff turnovers and to maintain high quality of staff caliber, there
should be conducive working environment and appropriate incentive mechanisms.
 Business risk: From the demand supply analysis, it is clear that there is a need to fill the gap via
establishing such a project in the area. Competitions in the proposed business area are very
limited, so that the poultry commerce is profitable. But the risk arises if poultry disease outbreak
within the project site.
 However, for these all and other risks preparedness measures have been designed and the
Business will respond accordingly

9. Duration of the period

Investment period: 5 years

Status of the project: New

Year of commencement march 10/08/09

Project period 2014 Ec

10. Implementation of project

The major tasks under the poultry farm development and establishment of the project are the following

1. Prepare poultry crops

2. Construction of poultry waiting house, offices and others
3. Purchase and Deliver improved poultry Breeds
4. Purchase different machines and related equipment
11. Estimated cost of the project

Net financial requirement

Planned investment Birr 3,862,000
Working capital Birr 2,573,450
Total financial requirement Birr 6,435,450

12. Feasibility of the project

There is no a well-established quantitative data to clearly see the future streams of demand and supply.
The data is completely qualitative. In most cases the first step in project analysis is to estimate the
potential size the market for proposed product or service to be offered. Consequently it is possible to get
an idea about the market that is likely to be captured.

12.1 DEMAND ANALYSIS

Following the structure network along with existence of regional government, a massive inflow of
government and non-government employees to the town as supplemented by natural increase of the
population, the rise of business community and rural urban migration have intensified population
explosion to the maximal, ended creation dramatic shortage of economic and social institution.

12.2 Supply Analysis

In a study like this, the availability of similar organization and their capacity must be first examined. Then
assessments of quantities currently available are examined. The envisaged project is expected to fill the
scarcity of supply and provide other services which were not given before. Therefore the project expected
face insignificant problem of competition. Thus the project is said to be reliable.

12.3 Market analysis

Since the town is near to Addis Ababa, there is high potential of market opportunity .The selling price is
high and it is still profitable.
 12.4 SOCIAL FEASIBILITY
Always keeping our sights on the betterment of the conditions of life in the area, this project will help
local people with tremendous multiplier effects, and will help them to enhance their capacity of finding
out other promising income generating projects, through the provision of essential community demands
and through facilitating the processes of earning profit and commercialization of the product in
considerate.

12.5 ECONOMICAL FEASIBILITY

The aim here remains to solidify and diversify the means of livelihood of the families involved, giving
future projection and stability to the practice of poultry production.

As it will be established, we are dealing with an activity that is profitable and that furthermore holds
great potential for future growth. It is an activity that has been unfolding in the area for many years and,
due to this, the people involved in its practice possess a high level of knowledge and management skill. It
add up considerable significance to the economic progress of the town specifically and the nation at large.

12.6 ENVIRONMENTAL FEASIBILITY

Some positive externalities of the project are:

 Provide quality product to the society

 Create employment
 Support the country’s development……etc

13. Source of finance

Source of Finance

Out of the total project cost of birr 6,435,450; 31% (1,969,000) is from Owners equity and the remaining
4,466,450 (69%) is expected to be financed by local banks through long term loan.

Loan= 4,466,450

Contingency= 446,645 (10%) of the total investment cost of the project

 13.1 Fund Allocation
Description Total project Own contribution Bank Loan (Birr)
cost Birr Birr
Building and construction 3,369,000 1,969,000 1,400,000
Machinery and equipment 140,000 - 140,000
Office furniture 13,000 - 13,000
Vehicle 340,000 - 340,000
Working capital requirement 2,573,450 - 2,573,450
Total 6,435,450 1,969,000 4,466,450
Percentage 100% 31% 69%
Table 3: Fund allocation of the project

13.2 Planned Investment

13.2.1. Building and constructions

Unit Qty U. price Total .value
Layers house M2 500 2,750 1,375,000
Growers house M2 500 2,500 1,250,000
Egg store and selling room M2 50 2,000 100,000
Office M2 30 4,000 120,000
Guard house M2 6 600 3600
Feed store and processing room M2 100 2,000 200,000
Changing cloth shower and toilet room M2 20 2,500 50,000
Fencing Meter 300 20 6,000
Water tankers with stand No 2 5,000 10,000
Burning pit M3 12 100 1,200
Water tankers with stand Sum - - 3,000
Electrification Sum - - 5,000
Sub total Birr 3,123,800
10% contingency 312,380
Total 3,436,180
13.2.2. Agricultural Machinery and equipment
Hammer mill with accessories Set 1 20,000 20,000
Mixer vertical with accessories Set 1 60,000 60,000
Layers Federer (round) Pcs 100 40 4,000
Growers Federer (round) Pcs 100 40 4,000
Layers waterier (round) Pcs 70 50 3,500
Growers waterier (round) Pcs 70 50 3,500
Laying nest (two tires each 10 holes) Pcs 100 100 10,000
Egg tray (local) Pcs 1000 1 1,000
Weighing scale (100 kg) for feed Pcs 1 1,000 1,000
Egg weighing scale (digital) Pcs 1 500 500
Sprayer (knap sack) Pcs 1 400 400
Buckets for feed/water Pcs 20 40 800
Wheel barrow Pcs 4 250 1,000
Rake, shovel spade Sum - - 2,000
Poultry and chick box No 50 200 10,000
Sub total 121,700
10% contingency 12,170
Total 133,870
8.3.3. Office furniture Sum - - 10,000
10% contingency 1,000
8.3.4. Toyota Hiluxe D/2.8 Pcs 1 280,950 280,950
Grand total investment 3,862,000

Table 4: planned investment

13.3. Poultry project revenue projection

Description Y1 Y2 Y3 Y4 Y5
No of eggs available for sale 1,500,000 1,500,000 1,500,000 3,000,000 3,000,000
Price/egg (Birr) 1.50 1.50 1.50 1.50 1.50
Revenue from sales of eggs 2,250,000 2,250,000 2,250,000 4,500,000 4,500,000
No of spent layers for sale 4,750 4,750 4,750 9,500 9,500
Price/PCS (Birr) 50 50 50 50 50
Sales from spent layers 237,500 237,500 237,500 475,000 475,000
 Feed available for sale in tons 670 670 670 380 380
Price/ton (Birr) 6,000 6,000 6,000 6,000 6,000
Revenue from sales of fed (Birr) 4,020,000 4,020,000 4,020,000 2,280,000 2,280,000
Poultry litter for sale tons 200 200 200 400 400
Price/Ton 800 800 800 800 800
Revenue from sale of poultry 160,000 160,000 160,000 320,000 320,000
litter
Grand total sales 6,667,500 6,667,500 6,667,500 7,575,000 7,575,000
Table5: Poultry project revenue projection

13.4 Operation cost estimates

No. Item Y1 Y2 Y3 Y4 Y5
1 Purchase of Doc 100,000 100,000 100,000 210,000 210,000
2 Raw material feed 1,800,000 1,800,000 1,800,000 1,800,000 1,800,000
3 Vaccine and medicine 2,500 2,500 2,500 5,000 5,000
4 Electric cost 1200 1200 1,200 2,500 2,500
5 Bedding material 1,200 1,200 1,200 2,500 2,500
6 Disinfectant 1,200 1,200 1,200 2,500 2,500
7 Transportation for row material 5,000 5,000 5,000 5,000 5,000
8 Causal laborers 1,400 1,400 1,400 3,100 3,100
9 Salary 213,000 213,000 213,000 213,000 213,000
10 Uniform 1,300 1,300 1,300 1,300 1,300
11 Miscellaneous 6,000 6,000 6,000 6,000 6,000
12 Maintenance 86,000 86,000 86,000 86,000 86,000
13 Insurance 26,000 26,000 26,000 26,000 26,000
14 Fuel, oil and lubricants 70,200 70,200 70,200 70,200 70,200
Sub total 2315,000 2315,000 2315,000 2,433,100 2,433,100
5% contingency 115,750 115,750 115,750 121,655 121,655
Total operation costs 2,430,750 2,430,750 2,430,750 2,554,755 2,554,755
Table 6: Estimated operating cost of the project
 13.5 Loan repayment schedule

Year Principal repayment birr Interest repayment birr Outstanding balance

(birr)
0 4,466,450
1 893,290 379,648 3,573,160
2 893,290 303,719 2,679,870
3 893,290 252,439 1,786,580
4 893,290 151,859 893,290
5 893,290 75,930 -
Table 6: loan repayment schedule

Bank Loan Repayment Schedule

Loan= 4,466,450

Contingency= 446,645 (10%) of the total investment cost of the project

Interest rate = 8.5%

Principal repayment=20%

Mode of payment= annually at equal installment amount

Period = 5 year.

13.6 Repair and maintenance costs

No. Description Actual value Rate Estimated cost birr
birr
1 Building and construction 3,369,000 2% 67,380
2 Machinery and equipment 140,000 3% 4200
3 Office furniture 13,000 3% 390
4 Vehicle 340,000 5% 17,000
Total 3,862,000 88,970
Table 7: Repair and maintenance costs
 13.7 Depreciation schedule
No. Description Estimated Depreciation Annual Dep.
value (birr) rate % Value (birr)
1 Building and construction 3,369,000 5% 168,450
2 Machinery and equipment 140,000 10% 14,000
3 Office furniture’s 13,000 5% 650
4 Vehicle 340,000 12% 40,800
Total 3,862,000 223,900
Table 8: Depreciation schedule

13.8 Project income statement

Project years
Description 1 2 3 4 5 Total
Gross revenue (grand 6,667,500 6,667,500 6,667,500 7,575,000 7,575,000
sale)
Less 15% VAT 1,000,125 1,000,125 1,000,125 1,136,250 1,136,250
Revenue after VAT 5,667,375 5,667,375 5,667,375 6,438,750 6,438,750
Less operating costs 2,430,750 2,430,750 2,430,750 2,554,755 2,554,755
Income before interest 3,236,625 3,236,625 3,236,625 3,883,995 3,883,995
tax and Depr.
Less Depression 223,900 223,900 223,900 223,900 223,900
Profit before tax and 3,012,725 3,012,725 3,012,725 3,660,095 3,660,095
interest
Less interest 379,648 303,719 252,859 151,859 75,930
Profit before tax(Gross) 2,633,077 2,709,006 2,759,866 3,508,236 3,584,165 15,194,350
Less tax ( 35%-7950) 913,627 940,202 958,003 1,219,933 1,246,508 5,278,273
Net profit 1,719,450 1,768,804 1,801,863 2,288,303 2,337,657 9,916,077
Cumulative net profit 1,719,450 3,488,254 5,290,117 7,578,420 9,916,077 -
GP=15,194,350 Bir

Table9: Project income statement

 13.9. Project cash flow statement
Project years
Description 0 1 2 3 4 5
Cash inflow
Owner’s equity 1,969,000
Medium term loan 4,466,450
Net profit 1,719,450 1,768,804 1,801,863 2,288,303 2,337,657
Deprecation 223,900 223,900 223,900 223,900 223,900
Total cash inflow 6,435,450 2,056,050 1,992,704 2,025,763 2,512,203 2,561,557
Cash out flow -
W.capital increase 2,573,450 142,700(-) 124005
Fixed assets 3,862,000
Loan repayment 893,290 893,290 893,290 893,290 893,290
Total out flow 6,435,450 1,192,760 893,290 893,290 1,017,295 893,290
Net inflow - 1,192,760 1,099,414 1,132,473 1,494,908 1,668,297
Cumulative net inf 1,192,760 2,292,174 3,424,647 4,919,555 6,587,822
Table 10; project cash flow

13.10 Project balance sheet

Project years
Description 0 1 2 3 4 5
Current assets cash 1,192,760 2,292,174 3,424,647 4,919,555 6,587,822
Working capital 2,430,750 2,430,750 2,430,750 2,554,755 2,554,755
Total current assets 2,525,898 3,623,510 4,722,924 5,855,397 7,474,310 9,142,577
Fixed assets
Building and const (5%) 3,369,000 3,200,550 3,032,100 2,863,650 2,695,200 2,526,750
Machinery and equb. (10%) 140,000 126,000 112,000 98,000 84,000 70,000
Office furniture’s (5%) 13,000 12,350 11,700 11,050 10,400 9,750
Vehicle (12%) 340,000 299,200 258,400 217,600 176,800 136,000
Total fixed assets 3,862,000 3,638,100 3,414,200 3,190,300 2,966,400 2,742,500
Total assets 6,387,898 7,261,610 8,137,124 9,045,697 10,440,710 11,885,077
Liability 4,466450 3,573,160 2,679,870 1,786,580 893,290 -
Owners’ equity 1,969,000 1,969,000 1,969,000 1,969,000 1,969,000 1,969,000
Retained earthlings 1,719,450 3,488,254 5,290,117 7,578,420 9,916,077
Total capital 1,969,000 3,688,450 5,457,254 7,259,117 9,547,420 11,885,077
Total liability and capital 6,435,450 7,261,610 8,137,124 9,045,697 10,440,710 11,885,077
Table11: project balance sheet

A=L+OE Example: for year 1 7,261,610=3,573,160+3,688,450…..7,261,610=7,261,610

14. Appraisal Criteria (viability indicators)
1. Gross profit margin= Gross profit /total sale*100

2. Net profit ratio=Net profit/Sale*100

3. Net present value: Thus we have the following two formulas for the calculation of NPV.

When cash inflows are even:

1 − (1 + i)-n
NPV = R × − Initial Investment
I

R is the net cash inflow expected to be received in each period;

i is the required rate of return per period;
n are the number of periods during which the project is expected to operate and generate cash inflows.
When cash inflows are uneven:
R1 R2 R3
NPV = + + + ... − Initial Investment
(1 + i)1 (1 + i)2 (1 + i)3
Where,
i is the target rate of return per period;
R1 is the net cash inflow during the first period;
R2 is the net cash inflow during the second period;
R3 is the net cash inflow during the third period, and so on
4. Internal rate of return (IRR): The Internal rate of return (IRR) is a rate of return on an
investment. The IRR of an investment is the interest rate that will give it a net present value of zero. To
find the internal rate of return of the above investment we find the value(s) of r that satisfies the following
equation:
� ��
NPV= CO+ �=� (�+�)� =0 OR

R1 R2 R3
+ +
(1 + r)1 (1 + r)2 (1 + r)3
IRR=r, Co= initial investment, R= net cash inflow
Illustration of the project profitability

1. Gross profit margin=GP

�� * 100
GPM= Sale

= 15,194350 * 100
35,152,500
GPM=43%

Since the GPM is >1 and positive, the project is acceptable.

2. Net profit ratio =NPR

NPR= �� * 100
Sale
NPR= �, ���, ��� * 100
Sale

NPR=28%/.

As like of the GPM, NPR indicates that the project will be profitable.

3. Net Present value=NPV

R1 R2 R3
NPV = + + + ... − Initial Investment
(1 + i)1 (1 + i)2 (1 + i)3
Where,
i is the target rate of return per period;
R1 is the net cash inflow during the first period;R2 is the net cash inflow during the second
period…….

R1 R2 R3
NPV = + + + ... − Initial Investment
(1 + i)1 (1 + i)2 (1 + i)3
 1,192,760 1,242,144 1,275 +1,637,608 +1,686,962 − 1,969,000
NPV = + +
(1 + .08)1 (1 + .08)2 (1 + i)3 (1 + i)4 (1 + i)5

NPV=5,533,428-1,969,000
NPV=3,564,428 Birr

The NPV of a project is defined as the value obtained by discounting separately for each year; the
cash net flows accruing throughout the life of the project at a fixed pre-determined interest rate .In
this project, 8.5% (Bank interest rate) have been used. The Net Present Value of the Poultry project is
3, 564,428 Birr. Since the NPV of the proposed project is positive, the projects is (will be) viable and
hence worth undertaking for investment. So, we hope the respective body will support the project.

4. Internal Rate of Return (IRR)

To find IRR for the above project, we must find the value of (r) that satisfies the following equation

� ��
NPV= CO+ �=� (�+�)� =0

(Ref.http://en.wikipedia.org/wiki/Internal_rate_of_return)

� ��
NPV= -CO+ �=� (�+�)� =0

7,034,617
NPV= -1,969,000+ ==0
(1 + r)5

By taking r=IRR, we can determine it as follows

IRR=r=.29003=29%
The IRR indicates the actual profit rate of the total investment outlay. It also indicates the maximum tolerable
point at which the project will undergo. It also indicates the maximum loan interest rate that could be paid
without creating any losses for the project. The IRR for the Poultry project is 29%. Since IRR for the
proposed project is higher than the discount rate, the project is acceptable and viable.

5. Payback period=PBP

Payback period is the number of years required to recover investment costs of the project. It can be
computed by summing up the returns of each year till the project recover from its initial investment.
Payback period covers the period that commutating projected annual benefits till the sum become equal to
initial investment outlay. By these method payback period becomes 3.5 years which is approximately 4
year.

15. MONITORING AND EVALUATION

Monitoring will be in the ongoing of our project, because it is necessary to do that in
order to correct if there are some mistakes in our activity. This also will worked by the
managers and every worker of the project. It also include community participations
because the community it self is one of the project. So, this monitoring activity will help
us to complete our project in a good manner.

We will also conduct both mid term and terminal or final evaluations. The mid term
evaluations will be in half of the project that is after five year. This will help us to smooth
completions of the project and the final evaluations will be at the end of the overall
process of projects.

This will be to examine our success and failure. To whether our planned objectives and
goals and activity are completed or not. It will also help us to do further projects to solve
economic and social problems of society by correcting our mistakes in this projects.
16. References
 CSA agricultural survey report, 2004 EC
 Project management for business and Engineering, 2nd edition.
 Project Management, Planning and Control,5th edition