Financial evaluation with methodology of real investment options for production and sale of organic coffee
DOI:
https://doi.org/10.29312/remexca.v11i3.1877Keywords:
abandonment, expansion, organic coffee, profitability, real options, volatilityAbstract
In Mexico, coffee farming is a highly relevant activity due to the generation of foreign exchange, jobs and the ecological importance of the crop; however, due to the uncertainty that the price provides, in the last 10 years the production of cherry coffee decreased at an average annual rate of 6%. An alternative to face this crisis is to differentiate the product and produce organic coffee. The present investigation was carried out in 2018 in the municipality of Ixhuatlan, Veracruz. The profitability of the production and sale of organic coffee was calculated through the evaluation of traditional financial investment projects for producers and cooperative (NPV= 1 504 372 and 283 566 respectively), complemented with the real options methodology; through binomial trees, which contemplates the volatility of prices and the change in decisions that the manager can make throughout the project. The analysis of the results showed that there are greater benefits when considering the expansion-abandonment option through the calculation of the total NPV of the production and sale of organic coffee with the real options methodology (1 959 111 and 411 455, respectively).
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