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A Capital Budgeting Analysis of Electricity Generation on Egg Farms

Published online by Cambridge University Press:  10 May 2017

Boris E. Bravo-Ureta  and
Glen McMahon
Boris E. Bravo-Ureta
Affiliation:
The Department of Agricultural Economics and Rural Sociology, University of Connecticut
Glen McMahon
Affiliation:
The Department of Agricultural Economics, University of Georgia
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Abstract

This paper analyzes the economic feasibility of an investment designed to digest anaerobically cage layer manure and convert biogas into electricity which is sold to a public utility. A simulation model is used to calculate the after-tax net present value (NPV) of a digestion system for eight egg farms differing in size under alternative scenarios. The results show that farm size and electricity price projections have a major impact on the magnitude and sign of the NPV estimates. Technical performance also has a marked effect on the investments’ feasibility, while tax credits and low interest rates have a relatively minor influence.

Type
Articles
Information
Journal of the Northeastern Agricultural Economics Council , Volume 12 , Issue 1 , Spring 1983 , pp. 41 - 48
Copyright
Copyright © Northeastern Agricultural and Resource Economics Association 

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Footnotes

The authors gratefully acknowledge the review comments of Marilyn Altobello, Stanley Seaver, and two anonymous reviewers.

Scientific Contribution No. 989, Storrs Agricultural Experiment Station, University of Connecticut, Storrs.

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