The impact of risk on the discount rate for different citrus varieties

• Published in: Agribusiness (New York, N.Y.) Vol. 7; no. 4; pp. 327 - 338
• Main Authors: Moss, C.B. (University of Florida, Lake Alfred, FL), Weldon, R.N, Muraro, R.P
• Format: Journal Article
• Language: English
• Published: New York Wiley Subscription Services, Inc., A Wiley Company 01.07.1991; John Wiley & Sons, Ltd; Wiley; Wiley Periodicals Inc
• Series: Agribusiness
• Subjects: Agricultural production; Agriculture; Asset pricing; CAPITAL ASSET PRICING MODEL; Capital assets; Capital budgeting; CAPITAL MARKET; Capital markets; CAPITAL MARKETS THEORY; CAPM; CITRUS; Citrus fruits; COMPORTAMIENTO ECONOMICO; COMPORTEMENT ECONOMIQUE; CREDIT; CREDITO; DECISION MAKING; Discount rates; Diversification; ECONOMETRIC MODELS; ECONOMIC BEHAVIOUR; ECONOMIC IMPACT; ECONOMIC THEORIES; ESTIMACION; FLORIDA; FLORIDE; Fruits; INVERSIONES; INVESTISSEMENT; INVESTMENT; MARCHE DE CAPITAUX; MERCADO DE CAPITALES; MODELE ECONOMETRIQUE; MODELOS ECONOMETRICOS; NET PRESENT VALUATION; Net present value; PLANT PRODUCTION; Prices; PRISE DE DECISION; PRODUCCION VEGETAL; PRODUCTION VEGETALE; Random variables; Return on investment; RIESGO; RISK; RISQUE; Statistical analysis; Studies; TEORIAS ECONOMICAS; THEORIE ECONOMIQUE; TOMA DE DECISIONES; VALEUR D'ESTIMATION; VALUATION; Florida; United States > US; USA, Florida
• ISSN: 0742-4477; 1520-6297
• DOI: 10.1002/1520-6297(199107)7:4<327::AID-AGR2720070403>3.0.CO;2-Q

The risk associated with citrus production has been especially evident in the past decade. During the 1980s, Florida citrus producers have seen major freezes and dramatic price variation. Because one way to account for risk in the investment decision is to adjust the discount rate, this study presents a systematic method for adjusting the discount rate. Further, this methodology is particularly adept for accounting for risk differences between varieties of citrus.