791-054 Financial Planning

The objective of this subject is to:

• introduce students to alternative quantitative planning techniques such as linear programming. This will allow the student to gain an understanding of the procedures involved in formulating a business plan; and

• provide students with an understanding of the factors to consider in determining economic strategies for machinery ownership and operation.

The content includes the application of linear programming to resource planning in agricultural systems; specification of the business objective; formulating a linear programming matrix considering the availability of resources such as land, labour and capital, and the restrictions of cropping rotations, feed availability and other technical limitations; evaluation and interpretation of the linear programming output considering the usefulness of marginal opportunity cost and marginal productivity value figures generated; the costs associated with the ownership and operation of farm machinery. In particular, techniques to determine methods of financing machinery acquisition, determining machinery capacity, and considering whether to use a contractor or own the machinery; and replacement policies and new versus second-hand machinery will be considered.

Two assignments (1500 words, 20%), and 1 assignment (2500 words, 60%).