Jumat, 11 November 2011

selling or keeping lambs

i got 2 main points based on jeremy hunt's journal. they are selling lambs or keeping lambs. this is all about investment. so lets check it out.
when we invest on something, we have to make sure whether the "something" is profitable or not. so how do we know whether the "something" is profitable or not? the answer is we have to find the net present value of this "something".
in this case, findlay (farm's owner) has chosen lamb as their main investment. findlay chose to keep the lamb first and then sell it at the right price because keeping lamb gave bigger margin than selling lamb. he could only get 10 pounds a head if he sold a lamb directly. the story would be different if he kept the lambs first, he could get until 30 pounds a head but the cost for keeping lambs is higher too.
keeping lamb is all about the cost. the farmer have to know how to care the lambs well so the cost will greatly decrease. the lower the cost, the bigger the margin they will get.

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