Our financial evaluation was bases on observations that identified recreational tourism as a high growth sector in coming years. Tourist flow is expected to continue expanding at the current 29% rate given current social peace and economic recovery now prevailing in Peru.
Additionally, a favorable legal framework and incentives to private investment create an encouraging scenario for the next five years. In its most likely scenario, project growth is estimated at 20% annually. Experiences elsewhere show that the perceived value of these kinds of services usually falls over time thus resulting in falling prices. Our project has estimated an annual 5% reduction in prices.
An alternative and more conservative contingent scenario was also developed to account for hypothetical sector stagnation in coming years and a 5% price drop for the reasons already mentioned. Preliminary analyses were developed for first year operations.
Revenues for flight sales amount to US$1,901,520 during the first year of operations with sales tax withholdings of US$290,062. Revenues for each sales point appear below.
Additional revenues should come from filming and photography services at US$10 for 30 minute film recording and US$6 for each set of six photographs. Surveys show 20% of clients will request filming services and another 20% will buy photography services. Estimated revenues from these services are US$95,076 and US$47,538 respectively. Institutional advertising should earn revenues for another US$70,000. Investment figures comprise flight equipment costs imported to Peru, working capital for the first three months and advertising expenses to position the product. These expenses are presented below. (See appendix 10).
Total investments for the first year of operations are US$793,797 with an operational budget of US$6269,290 of these, 73% are for flight instructor payroll expenses.
Total Remunerations (first year)
(in US dollars)
Overhead amounts to US$231,816 of which 71% are administrative payroll expenditures, as shown in detail by the following table.
Overhead (first year)
(in US dollars)
Seventy percent of the total investment of US$793,797 will be financed while the remaining 30% will come from the partner's capital contribution. The financed amount of US$555,658 will be paid over 20 quarters with a two quarter grace period at a 10% annual interest rate from international funding sources. A constant amortization installment included in the financing scheme makes interest payments drop from quarter to quarter, together with total payments. The annexes show in full the financial scheme designed for the project.
First year unit flight costs were averaged at US$21 by costing total operations and activities. The total amount was estimated at US$993,106 and then divided by the number of flights for the same period.
Monthly and yearly breakeven points were estimated at 20,817 flights, as well as the 57 flights required every day. We also estimated each glider should perform an average three daily flights to break even.
Expansion of installed capacity to serve a market growing at 20% annually will require four investment modules per year to be financed from non distributed earnings. (See appendix 11). These data were used to evaluate the project's economic and financial flows.
In the most likely scenario, (see appendix 13) the estimated current economic net worth is US$1,503,55 for a 80.72% internal economic rate of return. In the contingency scenario, (see appendix 14) the economic net worth estimate was US$1,119,170 for an internal economic rate of return of 74.03% computed in US dollars over a five year time span.
The stockholder risk of 10% is about the cost of received opportunity and the assumed risk for similar investment in the area.
|Table of Contents||Appendices|
0. Executive Summary|
1. Product Concept
2. Tourism Industry
3. Market Analysis
4. Competitive Advantages
6. Marketing Plan
9. Financial Results
Perus's tourist calendar|
Survey and Results
Revenues first year
Most likely scenario
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