Annual Cost of Investment in a Durable Asset Using Present Value Analysis

Abstract

There are a number of publications and sources of information concerning present value analysis as applied to investments. Hence, this is not a unique nor an original contribution. The tool, however, is an important and useful procedure in helping one decide whether to make an investment – and just as important – what the data needs are to analyze the decision. Present value analysis has not been utilized consistent with its potential. The purpose of this presentation is to provide an additional explanation with examples. My hope is that this additional emphasis will help some readers be more confident in its application and lead to more use of the tool by extension agents, student and farm operators.