METHOD 1 Collecting data method

Bogor, 21-22 October 2015 407 Therefore, it is very necessary to build black bamboo stands in the form of plantation or cultivation for the continuous feedstocks supply. A black bamboo plantation or cultivation can provide guaranteed supply of raw materials in terms of availability, quality, and continuity of supply in the long term. The continuity of availability of bamboo in the market with good quality can support the development of bamboo processing industry to produce high quality products and low productions cost, because there are no risk in bamboo availability for production. Aside from being a source of raw materials, black bamboo plantation is also useful in conserving the nature. As mentioned above, bamboo can be adapted to grow on marginal land. More bamboo grow on marginal land, the more marginal land is turned into green. Bamboo plantation has a great potential to be developed in Indonesia. Bamboo has good level of adaptation, even in marginal land. The informations about the economic benefits of bamboo cultivationplantation project are very rare. Bamboos are still considered as plants that can grow on its own without being planted. Whereas, bamboos is one of the high valueable economic resources for society. Everything related to the welfare of human beings should be treated well. So the initiation to plant bamboo in the form of plantation is the right step. This paper will explain the economic feasibility of planting black bamboo in the form of plantation. The objective of this paper is to assess and analyze the economic feasibility of black bamboo plantation based on investment criteria namely NPV, Net BC, IRR and payback period. 2. METHOD 2.1 Collecting data method The data used is secondary data from Sutiyono 2014 about the cultivation of bamboo. Data bamboo used is the cost and income from the cultivation of Black Bamboo species. The data used is the result of research on a company PT. XYZ as the request of the company name disguised that cultivate bamboos in Terbanggi Besar Village, Sub-District of Sumberjaya, District of Lampung Tengah, Province of Lampung, Indonesia. 2.2 Analyzing data method 2.2.1 Benefit cost component Analysis was conducted by classifying the data into costs and benefits. Component costs inlcude initial investment costs, fixed costs, and operational costs. The initial investment cost is the cost incurred in the first year of project, which are relatively large and cannot be discharged in one production period. While the fixed costs are costs that are not affected by changes in input and output generated on the cultivation of bamboo. While the variable costs are costs that are influenced by the course of the production process with regard to the amount of inputs used and the output produced. The benefit of bamboo cultivation is around the conditions that encourage the achievement of a business goal to obtain profit. The benefit includes the value of bamboo production and value of by-product. 2.2.2 Investment Criteria The investment criteria used in this analysis is based on Project Investment Criteria from Gittinger 1984, they are: Bogor, 21-22 October 2015 408

a. Net Present Value NPV

Net present value NPV can be defined as the present value of the income flow generated by the making of investment. NPV was calculated by substracting the total present value of cost from the total present value of benefit. ∑ 1 Where, NPV = Net present value, B = Benefit, C = Cost, i = interest rate, t = year.

b. Internal Rate of Return IRR

Internal rate return IRR is the discount rate which makes the net present value NPVof cash flow equal to zero. It represents the highest possible rate of return from an investment over the lifecycle of tree. The formula of IRR is, 2 Where, LDR = lower discount rate, DTDR = Difference between the two discount rate, NPV L = Present value of cash flow at the lower discount rate , ADPV = Absoulute difference between present value of cash flow at the two discount rates.

c. Net Benefit Cost Ratio Net BC

Benefit cost ratio is the ratio of incremental discounted cost by incremental discounted benefit. It implies the benefit derived from one unit of cost. Mathematically, the calculation of Net BC can be formulated as follows: Net BR = ∑ ∑ 3 Where, Net BC = Benefit-cost ratio, Bt = Benefit in t year, Ct = Cost in t year, t = number of years 1,2,3 ..n, i = interest rate.

d. Payback Period PP

Payback period is a period required to return back the investment expenditure by using cash flow. Calculation of the payback period can be defined mathematically as follows, Discounted payback period = 4 Where, I = investment value, Ab = net cash that has been discounted The decision criterion used in the study for each indicator is Net Present Value NPV greater than zero, Internal Rate of Return IRR greater than opportunity cost of capital, Net BC greater than one, and payback period before the life cycle of the project. The faster Payback period is preferred for investment. The discount rate relfecting the opprotunity cost of capital invested or loan rate. Discount rate can use the loan rates, deposit interest rate or real interest rate in accordance with the assumptions used for the source of capital. However, Gittinger 1984 suggested to use a low interest rate of 6-12 for assessing cultivation in developing countries. Bogor, 21-22 October 2015 409 3. RESULT AND DISCUSSION 3.1 Characteristics of black bamboo