A farmer invests ₦200,000 in fixed capital (housing, equipment) to start a broiler operation. The variable cost per bird is ₦1,200 (feed, medication). Each bird sells for ₦2,500 after a 6‑week growth period. The farmer plans to raise 1,000 birds per production cycle and to run four cycles per year. There is a 5 % probability that a disease outbreak occurs in a cycle, causing a 30 % loss of birds; the surviving birds are then sold at only 80 % of the normal price because of market saturation. Assuming the expected values, (a) compute the expected annual profit, and (b) state whether the fixed‑cost investment is recovered within three years.

Question

Accepted Answer

Expected annual profit = ₦4,980,000; the investment is recovered in the first year (hence within three years).

Neco 2018 Agricultural Science Question 20

Answer Options

About This Question

Master the Exam!