Learn how to use the Crop Profitability Analysis tool to reduce financial production risks, such as when to replace old orchards to keep profitable. The analysis helped one grower to decide to plant high density and low profile cherry trees.
Some key terms explained:
Time value of money: Due to inflation and risks, money is worth more today than some time in the future.
Discount rate: A percentage rate used in deterring the present value of future cash flows.
Net Present Value: Sum of all annual present earnings of an investment.
Internal Rate of Return: The gain or loss of an investment over a specified period, expressed as a percentage increase over the initial investment cost.