Gce Model Questions Vol1 2021 Agricultural Science Question 27

Practice objective / multiple choice question 27 from the 2021 Gce Model Questions Vol1 Agricultural Science examination.

Gce Model Questions Vol1 2021 Agricultural Science Objective / Multiple Choice Medium Difficulty
Question 27 GCE_MODEL_QUESTIONS_VOL1 • 2021 • AGRICULTURAL_SCIENCE • objective

A farmer is deciding whether to adopt a high‑yield wheat variety (Crop X). The variety requires a one‑time seed‑drill purchase of N30 000, lasting 5 years, and has a variable cost of N1 800 per hectare. Expected revenue is N5 000 per hectare. The farm has 10 ha. The alternative (Crop Y) uses the existing equipment (no extra cost), variable cost N1 500 per hectare and revenue N4 200 per hectare. Using a discount rate of 8 % per annum, calculate the net present value (NPV) of profit over the 5‑year period for each option and state which is more profitable.

Answer Options

A. Both crops have similar profitability; NPV ≈ N103 000 for Crop Y and N101 000 for Crop X (≈ N2 000 difference).
Correct Answer B. Crop Y is more profitable; its NPV ≈ N107 800 versus N97 800 for Crop X (≈ N10 000 higher).
C. Crop X is more profitable; its NPV ≈ N108 000 versus N106 000 for Crop Y (≈ N2 000 higher).
D. Crop Y is more profitable; its NPV ≈ N105 800 versus N99 800 for Crop X (≈ N6 000 higher).
Correct Answer
B
Correct Option:
Crop Y is more profitable; its NPV ≈ N107 800 versus N97 800 for Crop X (≈ N10 000 higher).

About This Question

This is Gce Model Questions Vol1 2021 Agricultural Science Question 27. It is one of the objective questions from the 2021 Gce Model Questions Vol1 Agricultural Science examination.

Difficulty level: Medium .

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