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Cotton Irrigation Decision Aid

Introduction

Cotton Irrigation Decisions: Will cotton irrigation pay? What irrigation system is best for me? Is irrigation a good investment? What is the payback period for irrigation systems?

Cotton Irrigation Decisions — Made Easier With Decision Aid: Uses familiar Excel spreadsheet to compare alternative irrigation systems. Calculates the net present value of alternative irrigation systems. Calculates a payback period for each system. Base data is supplied, but user supplied data customizes the results for an individual situation.

Investing in an irrigation system represents a major decision for most producers. All investment decisions should be carefully and accurately evaluated. This decision aid is specifically designed to assist users in evaluating irrigation investment decisions. The decision aid is developed within an Excel spreadsheet. The worksheet includes default values for various parameters needed in the evaluation process. However, it is the user�s responsibility to enter appropriate data for individual situations in the cells, as indicated.

This worksheet uses the net present value (NPV) concept in evaluating investment decisions. The flows of income and expense over time are discounted to a present value that is compared to the cost of the investment. If the net present value is positive then the investment is feasible. Since selection of appropriate discount (interest) rates is important, users may want to evaluate sensitivity of results to alternative interest rate assumptions.

 

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