POSSIBILITIES OF MIRR METHOD APPLICATION FOR EVALUATION OF INVESTMENTS IN AGRICULTURE: AN EXAMPLE OF PIGS FATTENING

In the case of some agricultural investments, often net cash flow changes its sign from positive to negative, many times during the project. It causes the problem of internal rate of return calculation, which is an important indicator of economic effectiveness of investments. That is, in such situations, internal rate of return cannot be used. To solve this problem, modified rate of return is applied. This paper aimed to describe this method in detail, and to show its calculation for investments in pigs fattening. By application of modified internal rate of return it is determined that pigs fattening, under assumed conditions, is economically justified. Also, authors calculated the upper limit of discount rate (cost of capital), to which investment in pigs fattening is economically justified. It is concluded that, in the case of specific agricultural investments (such as pigs fattening), the use of traditional internal rate of return could give the wrong image on actual rate of return on investments.


Variant title:
MOGUĆNOSTI PRIMENE MIRR METODA ZA OCENU INVESTICIJA U POLJOPRIVREDI: PRIMER TOVA SVINJA
Editor(s):
Cvijanovic, Drago
Issue Date:
2015-06
Publication Type:
Journal Article
DOI and Other Identifiers:
UDC 338.43:63 CIP 33:63(497.11) ISSN 0352-3462 COBISS.SR-ID 27671 (Other)
PURL Identifier:
http://purl.umn.edu/206920
Published in:
Economics of Agriculture, Volume 62, Number 2
Page range:
325-333
Total Pages:
9
JEL Codes:
G31; Q12; Q14
Note:
Original scientific paper
Series Statement:
Economics of Agriculture 2/2015
UDC: 339.138:634.11(497.6)




 Record created 2017-04-01, last modified 2017-05-27

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