A dairy farm has the following cash estimates: -20% A/P 1 2 3 P/F D A/F- PIG

A dairy farm has the following cash estimates:

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-20% A/P 1 2 3 P/F D A/F- PIG 0.8333 1.2000 1.0000 0.000 0.4545 0.6944 0.6545 0.694 Land price $2000,000; estimated to last for a very long time 0.5787 0.4747 0.2747 1.852 . 4 cost of buildings and equipment - $300,000; estimated to last for 10 years 0.4823 0.3863 3.299 0.1863 5 0.4019 0.3344 0.1344 4.906 • 6 0.3349 0.3007 0.1007 6.581 • Operation cost of the farm = $5,000 per year Cow raising cost-$2,000 per cow per year Cow purchase price = $1500 per cow 7 0.2791 0.2774 0.0774 8.255 8 . 0.2326 0.2606 9.883 0.0606 • Average life per cow = 5 years 9 0.1938 0.2481 0.0481 11.434 10 Milk production rate=6,000 kg per cow per year 0.1615 0.2385 0.0385 12.887 . . Milk selling price = $0.80 per kg Using annual worth estimates with an interest rate of 20% per year, determine the number of cows that should be raised in the farm. -20% A/P 1 2 3 P/F D A/F- PIG 0.8333 1.2000 1.0000 0.000 0.4545 0.6944 0.6545 0.694 Land price $2000,000; estimated to last for a very long time 0.5787 0.4747 0.2747 1.852 . 4 cost of buildings and equipment - $300,000; estimated to last for 10 years 0.4823 0.3863 3.299 0.1863 5 0.4019 0.3344 0.1344 4.906 • 6 0.3349 0.3007 0.1007 6.581 • Operation cost of the farm = $5,000 per year Cow raising cost-$2,000 per cow per year Cow purchase price = $1500 per cow 7 0.2791 0.2774 0.0774 8.255 8 . 0.2326 0.2606 9.883 0.0606 • Average life per cow = 5 years 9 0.1938 0.2481 0.0481 11.434 10 Milk production rate=6,000 kg per cow per year 0.1615 0.2385 0.0385 12.887 . . Milk selling price = $0.80 per kg Using annual worth estimates with an interest rate of 20% per year, determine the number of cows that should be raised in the farm.

Answer rating: 100% (QA)

First lets calculate the net present value of net benefits from 1 cow Year Item ... View the full answer