Economic and Financial Evaluation of an Agricultural Project in San Quintín: A Case Study

Abstract

This study evaluates the four-year economic and financial viability of a strawberry production and marketing company in San Quintín, Baja California, using profitability indicators such as Net Present Value (NPV), Internal Rate of Return (IRR), and Benefit-Cost Ratio (BCR). Based on cash flows derived from unit prices, costs, operating expenses, and financing at a 19.37% interest rate, the project achieved a Net Present Value (NPV) of $15,045,131.19 at an 18% discount rate. The Internal Rate of Return (IRR) is extraordinarily high (1,340.17%) because the first-year cash flow ($6,785,625.60) is over 13 times the initial investment ($510,000.00), allowing the company to recover its capital and generate a surplus in less than one year. Furthermore, the business operates with a comfortable margin of safety relative to its break-even point of 91,143 units. It is concluded that the project is financially viable and highly profitable; however, risks are identified due to downward projections in prices and sales volumes for years three and four, requiring mitigation strategies such as price hedging and financing restructuring.