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QUESTION THREE M. B of AN emergent farmer in Mpongwe district of Copperbelt province wishes to do away with the practice of hiring a tractor
QUESTION THREE M. B of AN emergent farmer in Mpongwe district of Copperbelt province wishes to do away with the practice of hiring a tractor for ploughing and other similar functions by purchasing own tractor for working on 250 ha of land for Barley Tobacco. The tractor costs K250, 000 and will have a salvage value of K20, 000 after 10 years of use. The interest rate at the African Development Bank is 10%, insurance for tractor is K2500 per year, road tax is K600 per year, and carbon tax K100,000, repairs will be K12,500 per year, fuel and lubrication will be K15,000 per year, and labour to operate a tractor will be K12,000 per year. Hiring the tractor costs K2, 000 per ha. Is this a wise option for the emergent farmer? (20 Marks)
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