We generate positive cash flows in the fourth year of production to be returned to our investors. In the eight year of operations, cumulative cash flows equal the initial investments. We produce high quality grade coffee fetching attractive prices.
The first year is used to develop the farm. The next years are needed to raise the coffee plants. In the fourth year, coffee can be harvested, and positive earnings and cash flows are generated. The simulation of cash flows over 20 years leads to an expected IRR of 25.0%. This IRR only reflects the total cash flows of the Mt. Sunzu Coffee Estate generated from operations – i.e. no exit payment is considered. Additionally, the IRR of 25.0% is based on the implicit assumption that 100% of the farm is financed with equity. Should the opportunity arise to finance part of the project through debt (with interest rates lower than 25.0%), the IRR for equity investors would increase.