Scott City KS | Boone & Crockett - 9/3/2024 23:29
You’re not going to get 7 1/2% over five years in a “low stress passive investment” guaranteed. That’s an assumed rate of return.
Eh, I don't know. The S&P 500 has yielded 10.26% since it's inception in 1957. So over the long term, his rate of return doesn't seem remarkably out of line. That being said it comes with risk. I don't think anyone is getting any returns like that out of treasuries or Bonds (I'm not a Bond guy, but I don't think that's out there).
Opportunity cost is tough. I don't bother chasing it because given the information I had at the time, I made the best choices. Applying hindsight is not only an exercise in futility, but a maddening one as well.
I try my best to keep track of the profitability per operation, since I do some custom work and try to see how bids I get on trade fit inside those numbers. Without knowing the financial performance of your business, it's impossible to tell the impact of a machinery trade. By the numbers, if you raised 100 bu corn on 15K acres at $4, that's $6M gross. Don't tell anyone or everyone will be buying tractors. What the math discussed here doesn't talk about is your overall margins. I tend to focus on profitability as opposed to cost. I'm in a position where I need to be achieving a return.
I was doing fairly well trading sprayers pretty regular, but now that used prices are headed south that doesn't make sense for me. Sprayers worked because they didn't take a ton of maintenance and I covered a LOT of acres with them. Tractors and planters are tougher for me so I end up running them until I get problems or find value in either a bigger size or advanced functionality, because they just go over the acre once (hopefully LOL).
|
New equipment cost per acre
