International Journal of Horticulture, 2024, Vol.14, No.2, 44-58 http://hortherbpublisher.com/index.php/ijh 47 fixed cost were taken into account for the calculation of the cost of production. Cost was calculated for one hectare of land from years 1st to 20th. The time value of money was considered during the calculation procedure. Total cost (TC) = Total fixed cost (TFC) + Total Variable cost (TVC) Where, Variable cost includes cost that is incurred on variable inputs such as labor, fertilizers (FYM), plant protection measures (Roger, Servo oil and Bordeaux paste) and tiller use. All variable costs are calculated on per year per hectare basis; Fixed cost is the cost of input that has life of more than one year. The fixed cost for land preparation and layout, pit digging and sampling establishment, fencing, irrigation canal installation and tools and equipment were included. Similarly cost incurred for land rent, land tax and water charge was calculated for every year. 2.2.2 Return per hectare To calculate the return per ha, the average production per tree was first determined. Then it was multiplied by 426 to obtain the production for 1ha of land because l ha of land would accumulate about 426 trees following the farmer's practice in the study site. Mathematically, Return per hectare = Quantity of apples produced per ha (kg) x Farm gate price (NRs). For the study purpose farm gate price was kept Rs 40 per kg as it was the most common price received by apple growers. 2.2.3 Cost-benefit analysis The data obtained from the survey were analyzed using cost-benefit analysis. Economic performance indicators such as the BC ratio, NPV, IRR, and payback period were calculated in the Cost-benefit analysis. The B: C Ratio (BC ratio) comprises the present value of all benefits generated to the present value of all costs incurred during the apple production period of 20 years. The formula for the benefit-cost ratio is outlined below: Benefit-Cost Ratio = � =1 � 퐵� 1+� � / � =1 � 퐶� /(1+� )� Where, Bt = Benefit in each year; Ct = Cost in each year; n = Number of years; i=Discount rate The net present value (NPV) indicates the present value of expected returns of the project or net cash flow over the life period of a project when discounted at the opportunity cost of capital. In this study, the opportunity cost of capital was considered 12.00 percent per annum. The positive NV indicates the worthiness of investment in an apple orchard. It is simply the net present worth of the cash flow stream. NPV= � �퐵�−퐶� /(1+� ))� Where, Bt = Benefits from each year; C = Costs in each year; t = Numbers of years; i = Discount rate Internal Rate of Return (IRR) represents the average earning capacity of an investment over the economic life period of the project. It is that discount rate that makes the net present value of the project benefits equal to zero. The trial and error method is usually used to determine IRR, and the same was used to compute in this study too. When the calculated IRR is greater than the market rate of interest, then the investment is considered viable. For the calculation of IRR, the formula given below was used: IRR = LDR + NPV at LDR /Sum of NPV at LDR and UDR Where, LDR = Lower discount rate; UDR = Upper discount rate 2.3 Payback period The payback period of the apple production indicates the number of years required to recover the investment made in establishing and maintaining the orchard. An Un-discounting technique was used to determine the PBP. The
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