363

THE APPLICATION OF DISCOUNTED CASH FLOW TECHNIQUES TO AGRICULTURAL

INVESTMENT PROBLEMS* G. E. DALTONt

Uwiversily of Reading

The increasing complexity of agricultural production and marketing is creating new farm managerial problems. Their solution requires management skills which are different in character to the intuitive abilities which most farmers have traditionally exercised in operating their holdings. New methods of business analysis and planning are being used increasingly by the managers of industrial firms and some of these are adaptable for use in farm situations. Recently, discounted cash flow (D.C.F.) techniques have been advocated as an aid in the solution of farmers’ investment problems.(’) The method, which is almost impeccable judged by the standards of economic theory, has the advan- tage that future variable cash flows are reduced to a single sum at one moment in time, thereby facilitating comparison between various alternatives.

Application of the method, however, is likely to be a difficult problem since the evidence of studies on decision-making show that many investments, even by industrialists, are made without formal analysis.@) Qualitative aspects alone often determine the choice of an investment. A possible explanation of this type of behaviour is that the implicit assumptions in investment appraisal techniques (such as D.C.F.), that cash flows are given and profits are to be maximised, are not commensurate with investors’ actual situations. In prac- tice, uncertainty may be so severe that the magnitude of future cash flows cannot be estimated. Investment decisions are more complex than mere comparisons of net present values or discounted yields from possible alternative projects. Other objectives, such as security and leisure, may ovemde the profit maximising motive.

These considerations along with others drawn from recent writings on the theory of the firm have been used as the basis for hypotheses in order to test the effects of uncertainty and the variety of business motives on the investment decision. The hypotheses adopted were: (1) the D.C.F. technique is a useful aid for farmers who are analysing an investment; (2 ) because of uncertainty all the effects of an investment cannot be included in cash flows; (3) objectives other than profit are important in an investment decision. An enquiry was camed out on six dairy farms t o provide information on the basis of which these hypotheses could be tested.

UNCERTAINTY The analysis of any investment deals essentially with future states of

affairs. Thus, for a decision to be made in the present, the variables which are considered can only be given expected values. If the evidence for a particular single v a h e is cmclnsive ezough for i t t o be held with zbsdute cer?air??y no further problems exist in applying discounting techniques. In extreme cir- cumstances, the degree of uncertainty may be so severe that it is impossible

* This was one of the winning entries in the 1966 Prize Essay competition. t The author wishes to acknowledze the financial support of the Milk Marketing Board

during the preparation of this study.

364 G. E. Dalton.

to quantify any future outcomes. More usually, imperfect knowledge has the effect that no single outcome can be taken as the (only possible one. The investor is confronted with a range of possible outco:mes attributable to any one alternative. Given this range, some elimination and simplification is necessary in order to make a decision.

It is part of the “conventional wisdom” that ecctnomic life is inherently uncertain, but in fact economic and agricultural support policies by government and improved production control may have eliminated the uncertainties of a “free” agricultural market. Farmers may therefore be justified to some extent in using current prices and costs in making capital budgets, On the other hand, there may be no alternative but to work with a single outcome in situa- tions where there is only one level of performance known, e.g. in the case of an innovation. A more rational approach to forecasting is to base estimates on trends and any possible future causes for changes in trends, but to arrive a t a single valued outcome by this method is less likely, especially when alterations in Government policy due to political, social and economic forces may be more difficult to predict than “free” market conditions.

An attempt to provide a rational framework for polarising a range of uncertain outcomes is found in Shackle’s theory of potential surprise.(3)

DIAGRAM 1 AN ANALYSIS OF A RANGE OF UNCERTAIN OUTCOMES (AFTER

SHACKLE).

POTENTIAL SURPRISE

t IMPOSSIBLE

hp hs 95 9P LOSS OUTCOMES GAIN

POTENTIAL SURPRISE CURVE I SO - STlMU LATORY FUNCTION

_- - -------

The Ap+lication of Discozlnted Cash Flow Techniques 365

Briefly, the analysis consists of measuring uncertainty in units of surprise since an individual can experience surprise and therefore measure it intro- spectively. A level of potential surprise is assigned to each level of expected gain or loss, the situation usually represented being that where the greater the gain or loss the greater the potential surprise. (See Diagram 1). The analysis then simplifies the range of hypothetical outcomes by means of iso-sthulatory functions which are formed by aggregating the potential surprise function and the corresponding levels of expected outcome. Stimulation is an increasing function of potential gain or loss and a decreasing function of potential surprise. Attention is then focused on the two maximum possible subjective stirnulatory outcomes (focus loss-focus gain) which occur at the points of tangency hp and gp in Diagram 1. Standardisation of the focus outcomes (hs, gs) in terms of potential surprise enables the final choice of an investment to be determined by indifference curve analysis.

A weakness of Shackle’s model is that the range of outcomes only refers to one likely future state of affairs. There will be a whole set of potential surprise functions for each future state of affairs so that his analysis fails to explain behaviour in the real world such as risk spreading. Other factors such as the amount of capital invested and the degree of confidence with which expectations are held are not considered. The analysis is thus no more than a possible description of the way a decision maker’s mind works. It does not provide a logical method of measuring uncertain cash flows cardinally or of aggregating a range of uncertain expectations for different future situations, nor does it deepen our understanding of how decision-makers’ contemplate possible gains against possible losses. The problem is thus best tackled by using Carter’s “common sense” analysis.(4)

Carter believes that the future can be envisaged not as a continuous range of outcomes, but as a small number of future states of affairs whose likelihood of occurring is subjectively measured in ordinal terms e.g. im- possible, possible, very likely. For each of these situations typical outcomes can be envisaged. Thus a continuous range of possible outcomes is reduced to a more manageable number, corresponding to the sum of the number of typical outcomes occurring in each likely future state of affairs, e.g. A farmer considering an investment a t the present time might envisage two likely future states of affairs, (1) continuation of British agricultural policy, (2) entry into the Common Market. In each situation he might be able to put a figure on his most optimistic and his most pessimistic expectations.

The lesson from Carter’s analysis in applying D.C.F. techniques in un- certain situations is to calculate yields or net present vaIues for each typical net cash flow. It may be that a project Ais more attractive in all the envisaged possible situations in which case, other considerations apart, A is likely to be adopted. Alternatively project B may be more profitable in some situations, so that there will either be a case for diversification or for delaying a decision, depending on the likelihood of the situations occumng in which B is profitable.

It is also possible, using D.C.F., to take account of the fact that the whole of the cash flows are seldom subject to the same degree of uncertainty. Tax allowances, investment grants and cost savings are not as uncertain as returns from the sale of new products and so the former can be discounted at separate lower rates. Further, errors which may be present in available data are not a reason for using crude analytical methods which yield results which are un- reliable for a decision-making function. The prccedure of discounting variable cash flows gives a “true” indication of profitability even if cash flows are only

366 G. E. Dalton

intelligent guesses about future performance. The investment decision is consequently simplified to a considerable extent and there will be less need to resort to other methods.

OBJECTIVES Economic theory has confined objectives other than profit seeking held by

the individual entrepreneur by regarding other forms of utility as costs to the firm.(5) Thus, in theory, it is possible to reconcile pro'fit maximisation by the firm and utility maximisation by the individual entrepreneur. However, in owner-manager type firms, such as farms, objectives other than profit will undoubtedly influence the final choice of investment projects.

There are three broad categories of objectives:@) 1. Physical well-being. 2. Social recognition. 3. Ideological motives.

( 1 ) Physical Well-being Physical well-being springs from the need to pr0vid.e for present and future

biological needs and for accepted standards of consumption. The ever present threat of poverty and the fight to survive is certainly justification for the assumption that the pursuit of wealth is the only aim behind economic activity.

(2) Social Recognition Social recognition involves achieving status, respect and power in a com-

munity or group. In the western capitalist world success in business very often brings status with it, but this will depend on the community and group.

(3) Ideological Motives Ideological motives include creative activity, patriotism, religious values

and the idea of duty, parental and family responsibilities.(') It is also plausible that even within the theoretically demarcated firm,

profits will not be maximised. Rather, in an uncertain situation a project will be accepted if i t is expected to yield a satisfactory level of profits. It may not be worthwhile to find out if other technical alternatives exist or to evaluate their performance. This corresponds to the Simon criterion of satisficing behaviour (in terms of a bounded rather than absolute rationality).

Consideration of entrepreneurial objectives helps in understanding the decision-making processes of farmers. Rationality cannot be identified as the single aim of profit maximisation unless other aims are perfectly complementary with profit. The need to provide for the future, also means that along term view of profits has to be considered. A profitable investment may be rejected because of its effect on liquidity and hence security. The importance of liquidity in investment decisions found in both industrial and agricultural studies indicates that firms are more interested in avoiding loss and extinction rather than maximising They are more anxious to avoid a drop in profits rather than to increase them, -4 further plausible hypothesis is that as firms become more prosperous they will be more concerned with objectives com- petitive with profits, e.g. leisure, the desire for the status of owner occupier for its own sake. In all firms, whatever their condition, profit maximisation as the only effective motive seems unlikely. A whole set of diverse, intercon- necting and continually changing aims will be operative in any given time period.

The Application of Discounted Cash Flow Techniques 367

The objectives which are relevant to a particular investment, “the effective subset of desires” will, according to Wright, be those which are related to the decision-maker’s most pressing subjective needs. Wright’s theoretical analysis of desires, explains the relevant objectives at any one time by representing the degree of satisfaction of an objective by a continuum between two limits, the minimum tolerable limit and the maximum tolerable limit, as in Diagram 3.

DIAGRAM 2 SCALE O F SATISFACTION FOR AN OBJECTIVE N.

PRESENT POSITION MINIMUM LIMIT MAXIMUM LIMIT

In Diagram 3, the relationship between different objectives is illustrated. P, is nearest to its minimum tolerable limit, so that this objective will consequently be an important consideration in the choice of investment.

DIAGRAM 3

-

MIN

MINIMUM 2 YUM *

Thus, if l=profit, 3=security, 3=leisure, then an investor wil l be looking for and prone to accept projects that will increase his leisure, even at the expense of profit and security. It will be noted that the criterion of achieving any single aim in this analysis is not one of maximising but one of attaining a tolerable level of satisfaction, within the imposed limitations of competitive objectives. Moreover, there is a tolerance range, which will give the decision- maker a ~ . ability to compromise in satisfying his vzricus objectives.

THE INVESTIGATION The theories which have been reviewed are couched in such general terms

that no concise specific hypotheses concerning the form of farmers’ investment

368 G. E. Dalton

behaviour could be found. The investigation therefore covered a wide area of the decision-making process in order to include as far as possible all the relevant information about the application of investment appraisal techniques. Six East Midland dairy farmers who had recently put up Tower Silos were inter- viewed after a trial run of a draft questionnaire with another farmer. It was postulated that a Tower Silo represents such a large investment that the decision to invest would be a conscious one.

Hypothetical conditions, for the D.C.F. methods to be applied were drawn up on the basis of the theories reviewed above. They are as follows:-

(I) A farmer should be able to put a figure on outcomes in likely future situations.

(2) Profit should be a significant, but not necessarily the over-riding ob- jective.

(3) A farmer must have enough confidence in his expectations of the future, otherwise he would either not invest or adopt risk avoiding strategies such as diversification.

(4) Capital should be regarded as a limitation on profit, so that return on capital would be a useful criterion of profitability.

These conditions were tested by asking questions pertaining to the follow- ing topics. Since the basis of any plans are expectatiions, farmers were asked about the form and extent of both their general and particular expectations. The type of general expectations, it was hoped, would show how many possible future states of affairs were envisaged. An attempt 1.0 indicate the degree of confidence in farmers’ expectations was undertaken by asking farmers whether they would be surprised at a different outcome from that which they expected. The use of numerical estimates would be revealed by an examination of the type of information obtained and the method of analysis undertaken. The latter would also indicate whether return on capital was used as a criterion for investment. The limitation on the supply of capital was investigated by direct questions about the farmers’ borrowing capacity.

The introspective approach adopted in the questionnaire assumes that the decision-maker knows how he made up his mind and can express the way in which this occurred. Care was taken not to suggest answers to farmers during the interview but any promising statements were followed up by encouraging the farmers to talk about them. The selection of fanners who hadrecently adopted Towers, reduced the discrepancies between past and current expecta- tions caused by any initial experience of performance. The diary approach could not be adopted in the time available for study and would not have satisfied the condition that all farmers should have invested in Towers. Any rationalisation of actions was allowed for by cross-checking answers where possible. However, the small size of the sample and the unavoidable drawbacks of the method of inquiry (e.g. inaccurate and partial recall) signify that no definite conclusions could be reached. The conclusions are therefore presented as informed opinions and possible hypotheses.

EXPECTATIONS All the farmers were confident that the current cost-price squeeze would

continue. There was general agreement that the Government would not change its policy of increasing efficiency, as expressed in the statements “We’ve got to do without subsidies” and “We’ve not had a war lately”. One farmer was aware that increased efficiency would come about by modernisation and investment. Milk was regarded as a secure enterprise because of the desire to escape the drudgery of milk production, although one opinion was that the tendency towards larger herds would result in “a flood of milk by 1970”.

The Application of Discounted Cash Flow Techniques 369

There were conflicting views about the future price of milk, but the overall opinion was that the price might rise in the short term but not in the long term. Inflation and the rising price of the protein component of feeding stuffs, due to the increase in world population, were the reasons given for the expected continued rise in the cost of concentrates.

The experimental evidence as to the wastage rates in Tower Silos is more pessimistic than the savings expected by the farmers interviewed.(lO) Neverthe- less, all the farmers were confident about their expectations. Five of the six farmers expected maintenance plus 2 gallons from silage, and to feed 4 lbs. of barley for the third and fourth gallon. But they had different opinions of savings in dry matter and increases in stocking rate. Labour saving was subject to more doubt, although on no farm were extra men to be employed to cope with the planned increases in the size of herds. It was also apparent that five farmers double-counted returns from Towers, since they expected a con- siderable saving of concentrates and an increase in stocking rate as well. This could partially be explained by the fact that most of these farms were in a dynamic situation and the adoption of a Tower would probably coincide with an improvement in management in other directions.

The agreement about the expected performance of Towers could be explained by the fact that the farmers relied upon each other for information and presumably boosted one anothers' confidence. Five of the six farmers were in contact with one or more of the others. There was an attitude of being able to achieve what the next man had or hoped to achieve. The pattern of contact is indicated in Diagram 4.

DIAGRAM 4 PATTERN OF INFORMATION FLOW BETWEEN FARMERS.

A

t3 > E

DIRECTION OF INFORMATION

The importance of a unanimous conformity of opinion was further elucidated by the fact that any misgivings were all based on doubt expressed by other farmers and in one case by Ministry of Agriculture Officials. The Iezdership of A was stated to arise because he possessed a good example of a Tower Silo system on a farm of similar type to their own. Other sources of information were vaned. Two farmers had sought information in the U.S.A. The N.A.A.S. and the manufacturers were consulted but only qualitative information had been obtained.

370 G. E . Dalton

OBJECTIVES The main objective of all the farmers was to maintain or increase future

income against the background of their expectation of a continuing cost-price squeeze. The aim to increase and maintain incomes was complementary with the desire for security and on most farms with the motive to expand. It was impossible to differentiate between these three motives as they were so inter- dependent. However, this finding is in agreement with a possible conclusion reached in Black’s recent publication, that “If a firm is technically up to date, then it is in a sounder position than its competitors to meet any expected or unexpected deterioration in the business situation”.(*) There may also have been a sense of pride in being up to date, from the point of view of being modem and also of being able to achieve a high level of technical efficiency.

Future profits were also sought as a means to achieve other ends. For example, one farmer’s son had recently left school and was mixing socially with the sons of larger farmers; the Tower Silo was a means of giving the son status. This reason for the investment was stated quite openly during the interview.

Self sufficiency was being sought on one farm. The family provided the whole labour force, no money was borrowed to make the investment and, assuming that their expectations were realised, very little if any concentrates would need to be purchased in future. The farmer believed that this self sui5ciency insulated him from Government policy changes. On the same farm, another reason for erecting the Tower was the social inconvenience caused by the smell and effluent from a clamp silo in the village in which the farm was situated.

Other intermediate objectives provided evidence for the “fixed asset” approach in simplifying the investment decision. There was a desire to cut down waste, reduce concentrate expenditure, increase stocking rates, ease management difficulties and improve working conditions. An insight into the general policy of the farmer was also gained in this part of the interview. The owner of a large estate regarded his home farm Tower Silo system as an experi- mental unit for his estate farms, which were being modernised in accordance with his views of future Government policy. Innovators’ profits were being sought on two farms, whilst a technical aim of one farmer was to promote future sales of pedigree stock., In the pilot study carried out on a beef unit, the farmer’s motivation was to break the “beef barrier,” that is, to develop a profitable beef enterprise.

METHODS OF ANALYSIS Most of the information acquired by farmers was in terms of vague im-

pressions, so that calculations had to be made on the available quantitative information. Qualitative aspects for the purposes of numerical analysis were left aside although i t should not be concluded from this that they were not considered. All the farmers said that their calculations b,acked up their hunches. There was a distrust of figures, their use being qualified ‘by subjective estimates of feasibility, e.g. one farmer regarded figures with “a pinch of salt” and consequently he assessed whether the saving in conc:entrates and or extra milk required to break even seemed reasonable.

No farmer estimated the return on capital as a percentage yield. In a typical calculation, depreciation and interest charges were compared with the extra returns from the savings in concentrates and increased stocking rate. Although time was taken into account by estimating the payback period, the deficiences of the method were recognised as shown by comments that a viable system would still be in operation after the payback period. Some evidence

The Application of Discounted Cash Flow Techniques 37 1

for discounting uncertainty was provided by a statement that conservative estimates were used for budgeting.

None of the farmers had to submit a plan in order to borrow capital which together with the fact that five farmers were owner-occupiers indicates that capital for the investment was not severely limited. However, the fact that most of the farmers borrowed money is sufficient justification in itself for estimating the return on capital.

In so far as the Tower Silo operators wished to maximise future profits tax allowances and government grants were considered in every case, advice with respect to the former being sought from accountants and bank managers. Conversely, their analyses could be criticised for their lack of completeness. There were no estimates of what would happen to income for different prices of milk. Changes in working capital requirements were not estimated, the main item cows being omitted on the grounds that they were home bred. A more serious criticism was the lack of consideration of alternatives. Three farmers had not considered any alternative fully, rejecting other systems on very scant evidence, e.g. one farmer quoted his neighbour’s experience who had failed to make a clamp system work. It may have been that objectives other than profit were operative. However, it would still be necessary to consider other alternatives to h d out how far they satisfy other objectives. There are three other possible explanations for this omission in the analysis.

(a) The farmer did not realise that there were any other technically feasible alternatives.

(b) The advantages of Tower Silos were so great that there was no need to calculate them.

(c) They relied on the calculations of other farmers. Examples of other inconsistencies for the application of D.C.F. which

emerged during the interviews were:- (a) A payback period of three years was estimated by setting against the

cost of the Tower, total farm profits including returns from cereals. This seems to indicate a willingness to invest up to three years future income which thus provides a different criterion to D.C.F. on which to base an investment decision.

(b) Individual enterprise gross magins were not available, the index of performance being the total profit of the farm. All calculations in this case were done in the farmer’s head.

(c) Double-counting in one case included in extra returns substantial savings in concentrates, an increase in herd size and an increase in the barley acreage to the extent of the saving in the silage acreage caused by the reduction of waste by the Tower.

DISCUSSION (1) Although no farmer estimated the return on capital there was sufficient

quantitative information and subjective ability to “put a figure” on expecta- tions for it to be estimated. Most farmers had borrowed money for the Tower which is an adequate reason for calculating the return on capital. The use of the payback period as a partial means to analyse the effects of time also indicated the need for the measurement of capital productivity.

(2) The adoption of D.C.F. methods would probably have simplified the investment decision. There would have been no need to qualify the payback period or to omit the extra working capital requirements. The latter would be incorporated into the net cash flows. Further, the application of the D.C.F. techniques could augment the fixed asset approach. In the speculative condi- tions of the real world the fixed asset approach and other rules of thumb may

372 G. E. Dalton

achieve in the long run equally good or bad results. Indeed, the fixed asset approach may be quite consistent with profit maximisation since capital is not homogeneous, rather it is a system or structure of v;uious assets used to pro- duce goods and services from given inputs. The b'etter utilisation of fixed factors of production or of improving given technical processes is a com- plementary activity to the existing structure. The fixed asset approach specifies the alternatives allowed within the limitations imposed by the existing bundle of capital, but it does not indicate the profitability of each alternative.

(3) The subjective certainty with which expectations were held indicates that the indirect measurement of risk by the Yield method may not be applic- able. Discounting, however, does allow other time effects to be simplified. In smaller less important investments, i t may be that risks and possible gains or losses are more substitutable for each other.

(4) Maximisation of profits was not an aim, the major end being that of maintaining income rather than increasing it, i.e. satisficing behaviour. There was evidence for other objectives such as security, expansion, status, but their relationship with profit could not be determined. The relevant conclusion is that qualitative factors may offset a lower yield as indeed a lower yield may be accepted for less risky projects. The final decision to act may rest on some completely different basis, e.g. a payback period including contributions from the whole farm or liquidity considerations.

(5) Guidance on such matters as the consideration of alternatives and the correct appraisal of input data will also be valuable in the making of more rational decisions (in the sense of Simon's bounded rationality). Quantitative information of new techniques, based on carefully recorded observations and experiments, are required, as well as objective forecasts of future market conditions.

AN ANALYSIS The evidence of the six farmers indicated the complexity of an investment

decision. To simplify the variety of factors involved in investment appraisal, a more comprehensive analysis than D.C.F. is required. Such an analysis has been put forward by Wright(g) but no experience so far has been gained of its usefulness in practice. However, a hypothetical example based on the information obtained from the investigation is described below. A matrix of alternatives and objectives is built up and in each cell an index of satis- faction is assigned. This could be percentage yield 017 some ordinal phrase or ranking. If these indices were a l l certain cardinal values a single mathematical solution would be possible, but in real life as indicated in the case studies, qualitative aspects are important. It is possible to incorporate different future situations into the model by constructing separate matrices for each one, e.g. for different political situations. Uncertainty may be built into the system by analysing performance for different cash flows, e.g. an optimistic and pessi- mistic forecast. Technical features required, such as size of buildings, the absence of smell and more personal aims such as status and liquidity can also be included. The matrix is thus a formal setting down of all the relevant factors for a decision.

Assuming only one likely future situation, e.g. a continuation of the cost- price squeeze, the farmer has a choice of either not making a change or of changing from his present system of conservation to one of two silage systems (tower and clamp). His "effective subset of desires" are as indicated in Diagram 5.

The Application of Discounted Cash Flow Techitiqzses 373

DIAGRAM 5 AN AN.1LYSIS O F AN INVESTMENT DECISION IN TERMS OF S.iTISFACT1ON.

Alternatives Objectives

++ + ~ _ _ _

A

B ++ C N N

~ ~ _ _ _

Alternatives A =Tower Silage. B=Clamp Silage. C=No change from present system. Scale of Satisfaction + + =Very satisfactory. + =Satisfactory.

N =Neutral. - =Unsatisfactory.

- - =Very unsatisfactory

Objectives 0 , =Optimistic discounted yield. 0, =Pessimistic discounted yield. 0, =Security. 0, =Expansion. O,=Low capital cost. O,=Ease of management. 0, =Complementarity of new system to

existing system.

The solution of the matrix is essentially a subjective operation depending upon what is regarded as satisfactory, the order of importance of different objectives and the assumed likelihood of different future states of affairs. A systematic approach suggested by Wright is to begin with the most important objective, e.g. security in column 3. A is thus a better alternative. However, in order to make sure that A does not give an unsatisfactory index of satis- faction for another objective, the row A is examined. In this case, 0, is very unsatisfactory. The final decision then rests on the relative importance of 0,. If capital is freely available A may be judged the most favourable alternative. If not, then alternative B will be examined. Here O,, 0, and 0, are unsatis- factory, so that it seems unlikely that any change will be made. This in turn depends on how strong is the desire to expand, 0, in row C. Similarly, the matrix in another future situation may indicate that clamp silage is the better alternative, e.g. if Britain joined the Common Market. The decision to act will then rest on the relative likelihood of each state of affairs occurring. If both are equally likely the farmer may wait and see, or if he considers a state of affairs to be improbable he may choose one alternative.

The problem raised by this analysis is to identify the objectives which are important in a particular decision and to establish the relationships between them, e.g. the complementary, supplementary and competitive objectives to profit. It is possible that typical circumstances of farmers may be associated with different aims, e.g. family structure may mean that expansion is a strong motive. These relationships if they exist require further investigation. The analysis in its present form shows the importance to professional advisers of helping a farmer to make a decision and aids our understanding of farmers' actions.

REFERENCES (1) Kerr. H. W. T. Methods of Apprais ing New Capital Investment in Agriculture.

University o f Nottingham, Department of Agricultural Economics, F.R. 161 (September, 1966).

Carter, C. F. (1954).

& Williams, B. R. Investment in Innovation. Oxford University Press

374 G. E. Dalton

(3) Oiga, S. A. Expectations in Economic Theory. London: Weidenfeid and Nicolson

(4) Carter, C. F. A Revised Theory of Expectations, in Uncertainty and Business Decisions.

(5) Alchian, A. A. The Basis for Recent Advances in the Theory of the Firm, Journal of

(6) Wright, R. Inuestmmt Decision in Industry. London: Chapman and Hall, (1964).

(7) Ashby, A. W. The Farmer in Business. Journal of the Proceedings of the Agricultural

(8) Black, C. J. Capital Deployment on Farms in Theory and Practice, The Farm Econo-

(9) Meyer, E. J. & Kuh, E. The Inuesfmenf Decision. Harvard University Press, (1957).

(10) Murdock, J. C. Silage Quality as aflected by Conservation and Storage Methods,

(1965).

Liverpool University Press (1954).

Industrial Economics. Vol. XIV, November 1965, No. 1 .

Economics Society. Vol. X, No. 2, 1953.

mist, Voi. X. No. 12, 1965, and Vol. XI, No. 1, 1966.

The Farm Buildings Association Journal, December, 1965.