Re: tractor value formula

Posted by Jerry/MT on May 17, 2005 at 10:27:57 from (206.183.120.242):

In Reply to: tractor value formula posted by mikeinWA on May 16, 2005 at 11:30:24:

There is a lot implied in the question you are asking and it doesn't boil down to a single, simple equation.
You use the word value but I think you mean price. Value is a little more subjective. (A 250 hp tractor is of no value to me on my ranch but a 65 hp utility tractor is a valuable tool to me.) The used tractor market is one example of a free market where supply and demand dictate price. For a given model there will be a range of prices that will be determined by the age, mechanical condition, and desirability. One could buy one of the manuals that give the listing of the various prices of all the models and curve fit the data to come up with an equation. Each model of each tractor would presumably have it's own equation.

You also mentioned ".....formulas for making good business decisions". Now whether the determined price makes the purchase a good business decision is another matter. In general you can step up to a better tractor if it is going to improve you productivity. (If your old tractor is broke, then you definetly need to get a better one because your productivity willl drop drastically with out it.) You eveluate it just like you evaluate whether you can add more acrage to your farm. How much will it cost(cash price, loan cost, time value of money, taxes, additional fuel fertilizer, chemicals, labor, etc) versus what additional revenue will it bring in over a certain periods of time? If the difference is positive over 5, 7, 10 years, it probably is a good business decision.

This is the philosphy that I use in evaluating major decisions. Most peole cal it "penciling it out".

Follow Ups:

• Re: tractor value formula mikeinWA 23:18:28 05/17/05 (0)

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