Before decisions regarding purchasing or retaining replacement females are made, producers may want to consider the economic value of a replacement entering the herd. One way to analyze this investment is to calculate the net present value, which reﬂects the value of potential future returns in today’s dollars based on an assumed rate of return.
When it comes to projecting the net present value offered by purchasing or retaining a replacement female, a number of assumptions about the future must be made. These assumptions include:
- purchase price of replacement female (if any)
- number of calving opportunities
- number of marketable calves, weaning weights, and sale price of calves
- annual cow costs
- annual heifer development costs (if any)
- weight and sale price of cow when culled, and
- discount rate.
We have developed a new decision tool and accompanying fact sheet to aid producers in making decisions regarding purchasing or retaining available replacement females. The spreadsheet tool estimates the present value of future returns, and net of costs incurred. Projecting the net present value offered by purchasing or retaining a replacement female allows producers to properly reﬂect upon the economic opportunity presented by any candidate investment in beef replacements. This "Net Present Value of Beef Replacement Females" fact sheet and spreadsheet are available on the Ag Decision Maker website.