Appendix 2: Economic and financial analysis for adding meat goats to a wool growing activity.

Item Units Year

1 2 3 4 5 6 7 8 9 10
Economic Analysis

Benefits:
Income from goat sales $ 25,333 25,619 29,742 30,229 31,107 32,623 33,925 35,280 36,690 38,157
Value of labour freed up from 429 446 464 483 502 522 543 565 587 611
change in activitivies 20,768
Salvage value of goats 15,796
Disposal of merino sheep
Costs:
Variable costs-goat activity $ 3,972 4,131 4,296 4,468 4,646 4,832 5,025 5,226 5,435 5,653
Replacements of goats 0 0 1,941 8,621 9,511 9,937 10,186 10,753 11,018 11,630

Acquisition of goats 30,493

Net income no longer received 10,069 10,472 10,890 11,326 11,779 12,250 12,740 13,250 13,780 14,331
from merino sheep
Annual extra net cash flow before tax $ -2,976 11,463 13,078 6,298 5,673 6,126 6,516 6,616 7,044 27,921

Tax payable $ 947 734 641 2,560 1,267 1,447 1,581 1,662 1,813 2,020

Annual extra net cash after tax $ -3,923 10,729 12,437 3,737 4,405 4,678 4,935 4,954 5,230 25,901

Net Present Value at nominal discount rates after tax of 15% = $30,592
After tax Internal Rate of Return >30% 3

Financial Analysis
Item Year
1 2 3 4 5 6 7 8 9 10
$ $ $ $ $ $ $ $ $ $
Cumulative net cash flow after tax -3,923 6,610 18,576 23,003 28,511 34,339 40,868 47,718 55,174 83,655
Interest on cumulative deficit or surplus -196 -471 690 1,102 1,150 1,594 1,896 2,225 2,580 3,527

Cumulative net cash flow after -4,119 6,139 19,266 24,105 29,661 35,933 42,764 49,943 57,753 87,181
interest and tax