TABLE OF CONTENTS Pages Symposium 1 - the National Sea ...

Table 3: Summary of pro forma cash flow analysis.
Category Year 1 Year 2 Year 3 Years 4-10
Income $43,712 $199,833 $349,707 $449,623
Operating Expenses $77,057 $173,489 $270,780 $300,377
Income - Operating Expenses ($33,345) $26,343 $78,927 $149,246
Capital Expenditures $224,526 $160,026 $148,943 $30,353
Income - Expenses (Before Taxes) ($257,871) ($133,683) ($70,016) $118,893
Taxes $0 $0 $3,906 $27,237
Income - Expenses (After Taxes) ($257,871) ($133,683) ($73,922) $91,656
Investor Paid-In Capital $287,871 $133,683 $73,922 $0
Production and income stabilized in Years 4-10,with net revenues (before taxes)
averaging $118, 893/year. After tax net revenues averaged $91,656.
The net present value (NPV) of the investment was calculated based on before tax net
revenues. A discount rate of 26% (6% opportunity cost for capital + 20% risk premium)
was used to calculate the NPV. If the NPV of a stream of revenues from an investment
were greater than zero, then the investor would be favorably disposed towards the
investment. If the NPV was less than zero, the investor would reject the investment. In
addition, the internal rate of return (IRR) was also calculated. The IRR is the discount
rate for which the NPV would equal zero. Under the set of assumptions used in the
baseline scenario, the NPV for the project equaled -$134,341, and the IRR equaled 12%.
In order for this investment to earn an IRR of 26% (the minimum acceptable rate of
return) the producer would have to be able to sell the shrimp for $6.04/lb. Based on the
results of this analysis, this would not be a desirable investment unless the shrimp could
be sold for greater than this price.
Sensitivity Analysis
While it is clear that we have not yet demonstrated the economic feasibility of producing
shrimp in freshwater recirculating systems, there certainly appears to be room for
improvement with respect to several important variables affecting the cost of production
in the system. Two key production variables that could be improved upon are the
survival rate and the growth rate of shrimp in the system. Four of the five crops used to
calculate expected survival rates were carried out in systems with very shallow nursery
tanks (depth = 20 cm). One production trial was carried out in a system with a deeper
nursery tank (depth = 34 cm) with better water circulation. The survival in this trial was
81%. In some recent trials carried out at HBOI in which artificial substrates were placed
in the nursery and intermediate sections of the culture tank, survivals have averaged
better than 70%. Growth rates in the 1999 production trials at HBOI averaged only 0.7
g/week when temperatures were maintained above 28ºC. However in ponds, growth
rates of 1.0 g/week are generally expected at this temperature. The slow growth rates
observed in the 1999 HBOI trials might be related to the fact that the greenhouses were
shaded with 95% shade cloth to minimize algal growth. Moss et al. (1992) demonstrated
that green pond water enhanced the growth rate of shrimp raised in aquaria. Moss (1999)
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