Land Valuation - Investment Value    Back to the Index       Land Valuation Calculator    Land Valuation - Investment Value What does it do? This calculator provides a person buying agricultural land for production, with a guide to how much should be paid for the land in question. Land has a value as a store of value (long term investment) as well as a production resource generating income each year. In terms of production, the value of land to the producer will depend upon the level of technology applied and the skills of the farmer. Therefore nominal prices for land, such as the Gold Crown, need to be adjusted in each individual case to determine the real value (the price worth paying) for the land concerned. This calculation produces the 'Investment Value of Land' which is equivalent to a price. Information used In order to calculate the investment value of land the calculator needs the expected return on investment (eri), expressed as a percentage and the net annual absolute return on a hectare of land (arh). Use can be made of the average aggregate gross margins per hectare. The annual average variable costs of production are also required (avc). Forumla Investment Value of Land (Investment price) = ((arh x 100)/(eri)) - avc where: arh = annual return/ha. eri = expected annual return (expressed as a percentage) avc = average annual variable costs/ha.