A computerized analysis of silo investments

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1982
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Virginia Polytechnic Institute and State University
Abstract

A computer program named Silo Investment Analysis (SILAN) was developed to assist dairymen with selection of silage structures. SILAN consists of a core program which can be supplemented with options to include borrowed money, income tax benefits, inflation, companion equipment, and an evaluation of dimensions. It computes present value of cost, annual cost, and costs per ton of silage. It also provides a cash-flow, and ranks silo alternatives on annual cost, cost per ton, and storage capacity.

Trial runs were designed for analysis by the program. With no borrowed money and a 9% minimum attractive rate of return, costs per ton of dry matter recovered ranged from $5.39 to $14.09 for horizontal, $9.60 to $24.92 for conventional upright, and $29.42 to $66.75 for oxygen-limiting silos. Annual costs ranged from $2045 to $4572, $1708 to $4673, and $4901 to $14805 for horizontal, conventional upright, and oxygen-limiting silos. However, horizontal silos were larger than the upright silos.

Predictive equations were developed for annual cost and cost per ton of dry matter recovered for each type of silo. Variables included price, minimum attractive rate of return, marginal tax bracket, and their products. Models were selected which contained the fewest terms and possessed R-square values greater than .95. Annual cost models for all silo types were or the same form, varying only by the size of regression coefficients. Formulas for cost per ton were more complex and varied by type of silo.

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