INVESTMENT IN LAKATAN PRODUCTION

AND REAL ESTATE
(CONDOMINIUM UNIT)
 
 

A REPORT IN

BA 341- INVESTMENT MANAGEMENT

By
 
JEWELYN C. ESPARES-CIOCON
GS 10 - DBA
 

8 December 2016
 INVESTMENT IN LAKATAN PRODUCTION

• WHY INVEST IN LAKATAN PRODUCTION?

 Banana is undoubtedly the most common and
economically important fruit crop in the country.

 It is the only fruit that abounds in the market

anytime of the year, the fruiting of banana is non-
seasonal.

 Fruits can be harvested 8-12 months after planting.

Why invest in lakatan production?
• Fresh lakatan is very popular in the market, however,
supply does always meet this high demand especially in
Luzon. Most of this banana variety comes from
Mindanao and are known to be of better quality.

• Banana has a great nutritional significance. It contains

11 vitamins, and among them are vitamins A, B and C.
although fats and protein contents are very low, banana
is rich in some minerals, notably phosphorous and
calcium, which are essential for bone development.
 WHAT ARE NEEDED TO PREPARE TO GO INTO
LAKATAN PRODUCTION?
•Area. The soil should be deep, loose, and fertile. Water should drain
from the soil easily, better if planted in areas with slightly acidic to
neutral soil (Ph 5.0-7.0) with temperature 25 to 30 degrees C and
average rainfall of 100-150mm/month.
 
•Planting Materials
Suckers – vertical shoots arising from the mother plants, 100-150cm
in height
Corms-the underground stems of banana that look like very large
tubers, about 10-15cm
Tissue-cultured planting materials- can be obtained from nurseries
and ready to be planted
•Farm Facilities, equipment and basic supplies
•Integrated Lakatan production technologies
•Marketing Arrangement
 SUMMARY OF INVESTMENT REQUIREMENTS AND PROFITABILITY

INVESTMENT COST FOR LAKATAN PRODUCTION PER HECTARE

PARTICULARS COST
Land clearing ₱ 1,800.00
Plowing 1,800.00
Layouting, staking and holing 3,000.00
Tissue-cultured planting material 750 x P 30/plantlet 22,500.00
Planting labor cost 1,500.00
Plantlets for replanting 50 plantlets x P 30 1,500.00
Replanting labor cost 1,000.00
Fertilizer 34,800.00
Chemicals for pests and disease control 1,800.00
Herbicide for weed control 3 gal x P 1,500 4,500.00
Labor for underbrushing, desuckering 24,000.00
Tools and equipment 3,000.00
Harvesting cost 50 x P 75 3,750.00
COST PER HECTARE UP TO HARVEST ₱ 104,950.00
 INVESTMENT COST FOR 1 HECTARE LAKATAN PRODUCTION
AT 4M X 4M DISTANCE (625 PLANTS - 3 YEARS)

PARTICULARS COST

Land Cl eari ng ₱ 1,800.00

Pl owi ng 1,800.00
Layouting, staki ng and hol i ng 3,000.00
Ti ssue-cul tured pl anting materi al P 30/pl antl et 22,500.00
Pl anting 1,500.00
Pl antlets for repl anting 50 pl antl ets x P 30 1,500.00
Repl anting 50 pl antl ets x P 10 1,000.00
Fertil izer 34,800.00
Chemical s for pests and disease control 1,800.00
Fertil izer 3 gal x P 1,500 4,500.00
Labor for underbrushi ng, desuckeri ng 24,000.00
Tool s and equi pment 3,000.00
Harvesting cost 50 x P 75 3,750.00
SUB-TOTAL ₱ 104,950.00

Year 2
Fertil izer ₱ 9,900.00
Herbi ci de for weed control 1,500.00
Labor for underbrushi ng, desuckeri ng 15,600.00
SUB-TOTAL 27,000.00

Year 3
Fertil izer ₱ 9,900.00
Labor for underbrushi ng, desuckeri ng 15,600.00
SUB-TOTAL 25,500.00

GRAND TOTAL ₱ 157,450.00

 ASSUMPTIONS
ASSUMPTIONS:
Area 10,000 sq.m.
Distance/Plant 4 x 4 meters
Plant Population 625
Survival Rate 80%
Harvest Time after 2 years
Average Fingers/harvest 135,000
Average Fingers/bunch 170
Average Bunch/Harvest 780
Price/piece ₱ 2.00
Price/Kilo ₱ 20.00
 INCOME STATEMENT
INCOME STATEMENT FOR LAKATAN PRODUCTION PER HECTARE
PER PIECE
PARTICULARS AMOUNT
REVENUE GROSS at 80% SURVIVAL RATE
1st Harvest - 18th-22nd month after planting
135,000 fingers at P 2/piece ₱ 270,000.00 ₱ 216,000.00
2nd Harvest
780 bunches x 170 fingers at P 2/piece 265,200.00 212,160.00
3rd Harvest
780 bunches x 170 fingers at P 2/piece 265,200.00 212,160.00
TOTAL REVENUE ₱ 800,400.00 ₱ 640,320.00
LESS: EXPENSES 157,450.00 157,450.00
NET INCOME ₱ 642,950.00 ₱ 482,870.00

ROI 4.08 3.07

 INCOME STATEMENT FOR LAKATAN PRODUCTION PER HECTARE
PER KILO
PARTICULARS AMOUNT
REVENUE GROSS at 80% SURVIVAL RATE
1st Harvest - 18th-22nd month after planting
12,500 kgs at P 20/kilo ₱ 250,000.00 ₱ 200,000.00
2nd Harvest
15,625 kgs at P 20/kilo 312,500.00 250,000.00
3rd Harvest
15,625 kgs at P 20/kilo 312,500.00 250,000.00
TOTAL REVENUE ₱ 875,000.00 ₱ 700,000.00
LESS: EXPENSES 157,450.00 157,450.00
NET INCOME ₱ 717,550.00 ₱ 542,550.00

ROI 4.56 3.45

STATISTICS
 INVESTMENT IN
CONDOMINIUM UNIT
WHY INVEST IN CONDOMINIUMS?
•  Investing in condos is a good real-estate
investment because of their:
– relative affordability,
– ability to acquire income through rents,
– and high price appreciation.

• Real estate satisfies a human need—the need

for shelter.
Affordability for a new investor
The secret lies in the investment of studio units. Studio units give you the option to have
the lowest monthly amortization and downpayment, while getting the best return of
investment. Studio units right now costs usually around 12,000 to 15,000 pesos monthly
amortization

It is all about rental income

Target market:
-young professionals
-expats, and businessmen in the central business districts.
-Students
 
Price Appreciation
Rental income is an added bonus as your property acts as a hedge against inflation.
The real value of real estate goes up at least proportional to the rate of inflation
which means your money is secure. Properties have the propensity to perform
better, particularly in prime locations. Prime locations mean higher price
appreciation
THE RETURN-ON-INVESTMENT (ROI) FOR RENTAL PROPERTIES

Assumptions
Purchase Price @ P 45K/sqm x 22 sq.m 990,000.00
Monthly Gross Rental Income 12,000.00
Annual Gross Rental Income 144,000.00
Zonal Value/sqm 25,000.00
Floor Area in meters 22.00
Fair Market value(ZV*FA) 550,000.00
 Rental Property(Cash payment)
Annual Gross Rental Income ₱ 144,000.00

1 Month vacancy/year (12,000.00)

 
Property management (12,000.00)
 
Maintenance reserve (12,000.00)
 
Real Property Tax (9,000.00)
 
Insurance (1,000.00)
 
TOTAL DEDUCTIONS (46,000.00)
Net Annual Income ₱ 98,000.00

ROI on the first year 9.90%

 PAYBACK PERIOD
PAYBACK PERIOD

INVESTMENT IN LAKATAN PRODUCTION

Land P 1,000,000.00
Investment Cost 104,950.00
Total Investment P 1,104,950.00
Total Cash Flows for Year
Cash Flows Cumulative
Year Cash Flow Cash Flow

0 P 1,104,950.00 P 1,104,950.00 Payback Period

1 200,000.00 904,950.00 = 4 + (154950/250000)
2 250,000.00 654,950.00 = 4 + 0.62
3 250,000.00 404,950.00 = 4.62 years
4 250,000.00 154,950.00
5 250,000.00 (95,050.00)

INVESTMENT IN CONDOMINIUM UNIT

Condo Unit P 990,000.00
Investment Cost 46,000.00
Total Investment P 1,036,000.00
Cashflows Per Year P 98,000.00
Payback Period in Years 10.57
 REFERENCES

  http://tinaypropertiesmanila.com/are-condos-a-good-investment
http://www.foreclosurephilippines.com/real-estate-investment-
property-how-to/
http://invest.cfo.gov.ph/pdf/part3/PCCARD/lakatan-prod.pdf

http://www.ppdobohol.lgu.ph/MunProposals/mabini_files/Mabi
ni_LakatanBananaProduction.pdf
http://rfu12.da.gov.ph/images/citizen2015/BANANA%20ROAD
%20MAP.pdf
•