An Investment Analysis of Honduran Teak Plantations Harvard Case Solution & Analysis

An opportunity was being evaluated by Matt from Beyond Forestry, a Honduran Company that used a unique teak increase model that was gifted. This accelerated growth model allowed for harvest of teak wood in as few as 7-12 years compared to 20-30 years for conventional commercial plantations. The demand for teak was growing as well as the supply was dwindling due to major limitations concerning the crop of native teak woods, which have a lengthy development cycle of 70-80 years. The present supply/demand states resulted in a lack of teak and created an opportunity for investment in businesses who could grow teak in an on-going, sustainable basis with crop rotations that are wieldy. He got data from Beyond Forestry in Honduras including operational expenses required to estimate cash flows related to the managed teak plantations, teak pricing, and growth rates of managed teak plantations. Of equal significance was an evaluation of the various hazards related to the teak plantation investment, given the economical and political environment in a developing market like Honduras.

This case is categorized under Finance case studies. PUBLICATION DATE: January 01, 2014 PRODUCT #: NA0282-PDF-ENG

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