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The journal AGRICULTURA (A) publishes scientific works from the following fields: animal science, plant production, farm mechanisation, land management, agricultural economics, ecology, biotechnology, microbiology
ISSN 1581-5439
Home Issues Issue 16 Binominal models application of investments in agri-food production

Binominal models application of investments in agri-food production

Karmen PAŽEK and Črtomir ROZMAN
pp. 61-67
 
ABSTRACT
 
The paper presents the integrated technologic-economic deterministic simulation system for decision-making support in agri-food production. Under current agricultural situation and conditions the standard management evaluation methods do not account the uncertainty. An emphasis was made on the use of standard financial analysis (i.e. Cost Benefit Analysis, CBA) and its indicator, net present value (NPVt) upgraded with the real options approach for fruit processing as a supplementary activity on a part time farm. The application of real options (RO) was presented using the binomial model. Three different apple processing alternatives were assessed; juice, vinegar and dried apples. Real options have an important value in decision management where standard methods of investment analysis are upgraded and take into consideration stochastic elements as well.
 
Key words: fruit processing, simulation, investments, binominal models

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