Farm equipment is becoming an increasingly important
financial asset for many farmers. Tractors probably represent the
single largest component of equipment asset value. As such, changes
in tractor values can have a dramatic effect on a farmer's financial
situation. Changes in equipment value can be attributed to
depreciation and the value of output produced. The general objective
of this study was to identify a specific set of variables explaining
changes in equipment value and to determine the relative importance
of these variables.
The Box-Cox power transformation technique was employed in
estimating the depreciation patterns. The method was applied to two
different sources of used tractor prices--auction and advertised.
Remaining value (RV), defined as the real market price in time t
divided by real purchase price, was regressed against several
independent variables. These independent variables were age, usage
per year, condition, horsepower, manufacturer, regions of the U.S.,
auction types, and net farm income.
A number of these variables were found to have some
important impact on RV. Depreciation patterns were found to differ
between manufacturers. Significant differences in remaining values
(RV) were found to exist for different regions of the U.S. and
different auction types. For both auction and advertised data, an
increase in usage produces a noticeable decrease in RV. For auction
data, however, the level of usage tends to have greater influence on
RV when the tractor is newer.
The results did not closely approximate any clear
depreciation pattern. The depreciation patterns are accelerated
relative to straight-line method and are a combination of the
geometric and sum-of-the-year's digits functions.
The RV model was used to examine optimal replacement ages
for farm tractors. Annual usage levels had the most influence on the
age at which tractors were replaced. Expensing and some tax law
changes had a less significant impact. / Graduation date: 1989
| Identifer | oai:union.ndltd.org:ORGSU/oai:ir.library.oregonstate.edu:1957/26860 |
| Date | 08 August 1988 |
| Creators | Bayaner, Ahmet |
| Contributors | Perry, Gregory M. |
| Source Sets | Oregon State University |
| Language | en_US |
| Detected Language | English |
| Type | Thesis/Dissertation |
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