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Would be a worthwhile option for the emergent farmer

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Reference no: EM132562012

Question 1: An emergent farmer in Luanshimba agricultural camp in Kapiri Mposhi district wishes to get rid of hiring a tractor for ploughing and other similar functions by purchasing own tractor for working on 500 ha of land for Soya beans. The tractor costs K200, 000. 00 and will have a scrap value of K10, 000.00 after 10 years of use. The interest rate at the FNB bank is 10%, ZSIC insurance for tractor is K1000 per year, road tax is K400 per year, and carbon tax K200.00, repairs will be K5,000.00 per year, fuel and lubrication will be K10,000.00 per year, and labour to operate a tractor will be K16,000.00 per year. Hiring the tractor costs K500 per ha. Ascertain whether this would be a worthwhile option for the emergent farmer? Use the marginal or partial budget computations to arrive at your answers.

Reference no: EM132562012

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