At larger discount rates, alfalfa seeding investment appears to have a larger NPV than the bred heifer investment. Considering the size and timing of the cash flows for each investment, offer an explanation as to why this is.
4 Sat Mar 13 10:35:20 PM AutoSave OR Lab 6 new Home dal Insert Draw Page Layout Formulas Data Review View Tell me Share Comments X cut Calibri (Body) 11 v General HH ' ' a-A- 29 Wrap Text Merge Center Autofum Fill 28-O. Copy Format Insert B ten 23 $ % 9 Delete Find Ideas Format Conditional Format Cell Formatting Table Styles Clear Sort F CSS c A D H . 1 1 M N N F 0 m 2021 2021 2018 1 2 3 4 5 6 7 . 9 10 Year Year Meld ton/acre Cash Flows PV Cash Flows 2020 ol 0 0 $67.065.603 567.065.60 0.95 18,240.00 $17.538.46 2022 2 0.89 17 ORA 00 $15,795.82 0.83 15,936.00 $14, 16705 2024 4 4 0.77 14,784 00 15 512,637.43 2025 5 0.71 13.632 005 $11.204.50 2026 6 0.65 12.480.005 59.861.13 2027 7 059 11.128.00 58.608 35 053 10.176.00 57,435 50 2039 9 0.47 9,024 005 56.140 141 2010 10 0.41 7872.00 55.318 04 SOD SEED ALFALFA INVESTMENT Costs Glyphosate Application Cost Disking (2 passes Cultivating Seed Seeding Total investment per acre Acres Established in 2020 Total investment Standing Hay Value (S/ton) Discount Rate NPV $10 56 $5.00 $40.76 59.10 $20.75 $18.62 $104.70 540 -367 OGS. 60 $30.00 0.04 $41.845.82 1721 11 12 13 15 16 17 Discountate 0.01 0.03 0.05 0.07 0.09 0.11 0.13 0.15 0.17 0.19 0.21 0.23 0.25 $57,487.28 $46.69757 $37-315.69 $29,116 21 $21.915.04 $15.560 99 $9.929.28 $4,916.38 543603 153.55403) 157204.57) $10.476.94) 1513.440.70) 20 21 22 23 24 25 2021 2023 2027 Year Year in Cash Flows PV Cash Flows 2020 o 166.600.00) 166.600.00) 2024 4 14,800.00 12,651 103 2022 2 14 300.00$ 13.683.435 2026 61 14,500.00 $ 11.695.655 2025 5 14800.00 15 12,164525 2028 8 14,800.00 10,314 225 28 29 30 31 2029 9 14,800.00 5 10,398 2015 2010 10 13.300.00 22.45525 5 $ $ 5 14.800.00 13,152 153 14.500 00 11,246 785 BRED HEIFER INVESTMENT Opporunity Cost of Call Sale Winter feed & yardage Summer Grating Breeding costs Cost per Bred Replacement Heifer Number of Helfers Retained Total investment (Assume this all occurs in 2020) First Weaned Calf year) Discount Rate $1,100 $400 $225 $75 $1,800 37 $ 51.708.43 NPV IRR 14 BON 33 34 35 36 2022 0.04 38 35 40 Discount Rate 0.01 0.03 0.05 0.02 0.09 0.11 0.13 0.15 0.17 0.19 0.21 0.23 0.25 $75,669.65 $59.043.81 544,943.83 $32.921.69 $22,617.95 $13,742 71 56,060.94 Net Present Value 00000 5.000.00 50.000 56,45355) $11,572.09) 1516.081 14) $20,069.223 1523.610.13) 45 540,000 Questions so 51 -NINA - VE 1 541.845.82 2 17.207 3 $51,708.43 4 14.80N 5 See above in the tables for the NPV for Aand 6 Seegraph 1 The war. 53 54 55 $10.000.00 5000 2001 2002 Assignment +
