Case 1:

Lets assume that the government of Samoa would like to develop a project to increase the production of coconut oil to support 400 families who were affected by the Tsunami.

The government is proposing to rebuild the coconut oil industry by developing a program that will provide technical support and training to the 400 families to rebuild and increase production.

The cost of the program will total 25 Million Tala per year for 5 years. It is also expected that the program will increase production of coconut oil from 40,000 MT to 60,000 MT per year for the first 6 years and to 70,000 MT for the following 6 years. The Coconut oil can be sold in the local market or can be exported. There are export taxes of 2%.

Samoa is a net exporter of coconut oil to Australia. The CIF at Brisbane in Australia is AU$1850 per MT.

New infrastructure is required for effective implementation of the project at a total cost of 12 Million Tala and an annual maintenance cost of 3.5 Million Tala.

Currently the 400 families are costing the Samoan government 800 Tala per month per family from the governments welfare program. The increase in family income for the 400 families will mean that they will not have access to the welfare program anymore.

Part I:

Based on what youve learnt from this course, and your understanding of project evaluation,

A) Describe or summarize what you understand the issue to be (5)

B) What do you think should be the objective and sub-objectives? (5)

C) Do you see a rationale for public sector involvement? Explain (5)

D) Discuss the potential benefits? Be comprehensive (10)

E) Discuss the potential cost? Be comprehensive (10)

F) Are there any external impacts? Explain (5)

G) Identify the stakeholders and describe who are the winners and losers? (10)

Part II:

With the information above and any additional information you can find and your own reasonable assumptions, undertake a rough cost benefit analysis

A) How will you quantify and monetize all your identified (10)

1) Costs

2 ) Benefits

3) What time frame will you use and why?

B) With a spreadsheet estimate (30)

1) The Present Value Cost Economic

2) The present Value Benefits Economic

3) Discuss any qualitative costs and benefits

C) With the following criteria, determine whether the project is economically feasible (10)

1) Net Present Value Criteria

2) Benefit Cost Ratio