Annual Equivalent Value, Benefit Cost Ratio, and Composite Performance Index as Valuation Appraisal Support of Teakwood Plantation

  • Sugiharto Soeleman Graduate Study Program of Business and Management, Graduate School, Bogor Agricultural University, Pajajaran Main Road, Bogor, Indonesia 16151
  • Endang Gumbira Sa'id Department of Agroindustrial Technology, Faculty of Agricultural Technology, Bogor Agricultural University, Academic Ring Road, Bogor, Indonesia 16680
  • Heny Kuswanti Suwarsinah Daryanto Department of Resources and Environmental Economics, Faculty of Economics and Management, Bogor Agricultural University, Academic Ring Road, Bogor, Indonesia 16680
  • Arif Imam Suroso Department of Management, Faculty of Economics and Management, Bogor Agricultural University, Academic Ring Road, Bogor, Indonesia 16680
Keywords: annual equivalent value, benefit cost ratio, composite performance index, valuation appraisal

Abstract

Teak (Tectona grandis L.f) is a premium high-value hardwood species being viewed as the most preferred species for investment opportunity. Recently, there has been a gradual move away from state control of teakwood plantation toward the participation of private enterprises. Several enterprises offer investment opportunity of teakwood plantation in which one of the main selling points being offered is a quick harvesting schedule. A quick harvesting time, however, might not provide the best outcome to the investors. This research exercise and compare the valuation appraisal of different harvesting schedules. The research focused on project planning, enterprise budget, financial projection, and valuation measurements to arrive at overall appraisal. To avoid any possible bias of individual investor's preference on common valuation criteria such as total investment, net cash flow (NCF), net present value (NPV), internal rate of return (IRR), profit on investment (P/I), and payback period (PBP), 3 otherS criteria namely benefit cost ratio (BCR), annual equivalent value (AEV), and composite performance index (CPI) have been applied to arrive at a more fair valuation. It is concluded that the longer the harvesting schedule, the better valuation outcome could be achieved, and therefore, investors should critically review any investment proposal in accordance to their preference on valuation criteria.
Published
2014-04-29
How to Cite
Soeleman, S., Sa’id, E. G., Daryanto, H. K. S., & Suroso, A. I. (2014). Annual Equivalent Value, Benefit Cost Ratio, and Composite Performance Index as Valuation Appraisal Support of Teakwood Plantation. Jurnal Manajemen Hutan Tropika, 20(1), 58-65. https://doi.org/10.7226/jtfm.20.1.58-65
Section
Articles