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Author(s): Jana Ladvenicová, Silvia Miklovičová

Title: Application of net present value by the land purchases

Source: International Scientific Days 2016. The Agri-Food Value Chain: Challenges for Natural Resources Management and Society

Document Type: Scientific paper

ISBN: 978-80-552-1503-7


Publisher: Slovak University of Agriculture in Nitra

PY, pages: 2016, 201-206

Published on-line: 2016-06-24

Language: eng

Abstract: In Slovakia most of the agricultural companies operate on the leased land (approximately 85 % from total land area). The agricultural companies can not only lease the land but also purchase it and operate on it. Through net present value we quantify whether it is worth for the agricultural companies in each Counties of Slovakia to lease the land and based on which conditions. Net present value belongs to the basic indicators of investment decision. By its calculation it is important to define the capital expenditure as well the calculation of expected financial incomes. The investment is viable if the indicator reaches the positive values. By the land lease the indicator NPV reaches negative values in all Counties of Slovakia. We modelled the capital expenditure (official land price) and financial incomes (land rent) by which NPV would reach minimal positive values. From the calculation of NPV results that the official price should be much lower to reach the minimal positive values of NPV.

Keywords: farms, net present value, NPV, land, land lease, land purchase

JEL Classification: M21, Q15, Q24

Rights: Open Access :: Creative Commons Attribution 4.0 Licence
Creative Commons License
Toto dielo je publikované pod/This work is licensed under a Creative Commons Attribution 4.0 International License.