Economic Efficiency of Investments in the Growing of Medicinal Herbs and Spices

Abstract

Medicinal herbs are important for human nutrition and industrial processing. The main goal of research is assessment of economic effectiveness of investments in seedlings production and establishment of plantation under mentioned crops. Analysis involves data from the coal mine complex in Pljevlja (Montenegro), while implies dynamic methods such are Net Present Value, (Modified) Internal Rate of Return, and Payback Period. Although research results favored the seedlings production, determined crossover rate indicates some opposite conclusions. Inconsistency in conclusions according to Net Present Value and Internal Rate of Return occurs only for certain range of discount rate. Research also implies sensitive analysis of crossover rate according to changes in volume of invested assets. So, management could make appropriate decisions towards the investments in medicinal plants production. Derived results suppose that investment in production of medicinal herbs seedlings is economically more effective for all discount rates above the crossover rate (6.08%).