Models C and D assume expenditure levels of $5,000 and $6,000. These 

 levels are higher because gross income is higher than in the other models, 

 and there is a relationship between gross income and consumption ex- 

 penditures. 



Annual Cash Business Expenditures 



Annual cash business expenses of maintenance, taxes, and insurance, as 

 derived from the survey of broiler growers, amounts to an average of 7.0 

 cents per square foot. This figure is used in the analysis for all models 

 since these costs are a function of size. A higher figure of 10.0 cents per 

 square foot is also used to reflect increased costs in the future for main- 

 tenance, taxes and insurance. 



Depreciation 



Neither depreciation nor debt repayment are included as costs to be 

 deducted in this type of analysis. Instead, these payments are part of the 

 residual available for capital accumulation after deduction of expendi- 

 tures for consumption and business costs. These residuals are used to de- 

 termine present value factors of several capital sums and how long it 

 would take to accumulate these amounts of capital. 



Interest 



Interest is charged at a rate of five percent for capitalization purposes. 

 This approximates the return that growers could receive by investing in 

 other alternatives. This figure also approximates the interest charge that 

 a grower would have to pay to borrow capital to invest in broiler produc- 

 ing facilities. In terms of conventional farm accounting procedures, this 

 interest rate is synonymous with the charge for interest on investment. 



Capital Accumulation Potentials 



Six capital accumulation quantities were selected to solve for the time 

 periods required to accumulate sums by the four models The selected 

 sums range from SO. 50 to $3.00 per square foot of house space at 50-cent 

 intervals. This range includes most feasible purchase or construction in- 

 vestments per square foot, and additional capital accumulation that may 

 accrue at a given interest charge. 



Plant and Equipment Investment Costs 



In a previous section the investment costs for buildings and equipment 

 for broiler production were discussed. The range of cost per square foot 

 typically is between $1.20 and $1.80. These amounts are used only as 

 guidelines in this study. 



Time Required to Accumulate Capital 



The time periods required to accumulate the selected capital sums are 

 the unknowns to be determined. Each investor makes his own decision 



36 



