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| Unterschultz, James R.; Mumey, Glen. |
| Secondary asset market data for combines and tractors are used to estimate and separate out historical economic depreciation, embodied technological change and time value change. Combines and tractors generally exhibit constant geometric economic depreciation on a year to year basis. Depreciation rates vary by manufacturer. Farm investors can use these manufacturer specific depreciation rates reported here to estimate terminal asset values. The study found significant seasonal differences in machinery depreciation rates. A major source of error in forecasting terminal asset values comes from changes related to time. There is a predictable time component to the constant quality asset index that has not been investigated in previous studies. Unanticipated... |
| Tipo: Working or Discussion Paper |
Palavras-chave: Farm Management. |
| Ano: 1996 |
URL: http://purl.umn.edu/24119 |
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| Mumey, Glen; Unterschultz, James R.. |
| A farmer planning to use Net Present Value (NPV) analysis on machinery requires estimates of operating benefits over time, an estimate of terminal or salvage values and a risk-adjusted discount rate. Using financial market information and related Root Mean Square Errors on machinery value forecasts, risk premia for combine and tractor investments are estimated for non-diversified investors. These risk premia can be added to the risk free rate in comparable maturity long term bonds to derive an appropriate discount rate for NPV analysis. Where machines are held as single-asset portfolios, risk premia identified for discounting terminal value vary between 5.5% and 8.3% for combines and between 2.4% and 3.6% for tractors, depending on age during the holding... |
| Tipo: Working or Discussion Paper |
Palavras-chave: Farm Management; Risk and Uncertainty. |
| Ano: 1996 |
URL: http://purl.umn.edu/24123 |
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