Economic Efficiency of Investments in Agricultural Land

Sašsa Z. Todorovic, Zorica R. Vasiljevic and Zoran N. Rajic
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Sašsa Z. Todorovic: University of Belgrade, Serbia
Zorica R. Vasiljevic: University of Belgrade, Serbia
Zoran N. Rajic: University of Belgrade, Serbia

International Journal of Sustainable Economies Management (IJSEM), 2012, vol. 1, issue 1, 61-74

Abstract: The goal of the research presented in this paper is to examine economic efficiency of investments in agricultural land, to detect the most important factors influencing this, and to contribute successfully to the formulation of the answer to the question if and under which conditions this investment is justified. The analysis of economic efficiency of investments in agricultural land is based on dynamical methods for investment evaluation. Analyses have shown that investing in agricultural land amounting to 4,000.0 EUR per ha at discount rate of 4% would be more profitable than the amount which would be realised by external investment, but only when applying the 30 year investment horizon, because at the end of the 30 year of investment horizon, the amount of receipts, which is higher by 284.00 EUR than the amount realised by external investment of capital, what is not the case with the amount realised after the 10 year of investment horizon (577.00 EUR less). It is a consequence of realised rate of return on investment in agricultural land amounting to 4.39% for the 30 year and 0.04% for the 10 year investment horizons.

Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:igg:jsem00:v:1:y:2012:i:1:p:61-74

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