Appendix 1 – Calculation type Formulas
In this article
Calculation type Formulas
Four calculation types are available for calculating Fair Values:
Net Present Value
Net Present Value Prorated
Fair Value Less Cost to Sell
Expected Market Value of Crop
Net Present Value
The formula for Net Present Value in the context of the 365 vertical biological asset module is as follows:
Example:
Running the calculation worksheet with a Period End Date of July 31, 2024.
10 plants of Lime Sherbert with a job start date of May 1, 2024, and the following fair value settings:
Calculate total estimated yield: 10 plants * Estimated Yield of 150 gr.
10 * 150 = 1,500 (Total estimated yield)
Calculate fair value amount: Fair Value of 8.5 per GR less Cost to Sell of 5 per GR multiplied by total estimated yield in GR.
8.5 – 5 = 3.5 (FVLCS per GR)
3.5 * 1,500 = 5,250 (Fair Value Amount)
Calculate the discounted time period: Add 1 to the discount rate of 0.10. Take that value, 1.10 to the power of time (Avg. Days to sell of 30 divided by the selling period of 365 days).
1 + 0.10 = 1.1 (Discounted Rate)
30 / 365 = 0.0822 (Time Period)
1.1 ^ 0.0822 = 1.0079 (Discounted time period)
Calculate Net Present Value: Fair value amount of 5,250 divided by the discounted time period of 1.0079.
5,250 / 1.0079 = 5,208.85 (Net Present Value)
Net Present Value Prorated
The formula for Net Present Value Prorated in the context of the 365 vertical biological asset module is as follows:
Example:
Running the calculation worksheet with a Period End Date of July 31, 2024.
10 plants of Lime Sherbert with a job start date of June 1, 2024, and the following fair value settings:
Calculate total estimated yield: 10 plants * estimated yield of 150 gr.
10 * 150 = 1,500 (Total estimated yield)
Calculate fair value amount: Fair value of 8.5 per GR less Cost to sell of 5 per GR multiplied by total estimated yield in GR.
8.5 – 5 = 3.5 (FVLCS per GR)
3.5 * 1,500 = 5,250 (Fair Value Amount)
Calculate the discounted time period: Add 1 to the discount rate of 0.10. Take that value, 1.10 to the power of time (Avg. Days to sell of 30 divided by the selling period of 365 days.
1 + 0.10 = 1.1 (Discounted Rate)
30 / 365 = 0.0822 (Time Period)
1.1 ^ 0.0822 = 1.0079 (Discounted time period)
Calculate Net Present Value: Fair value amount of 5,250 divided by the discounted time period of 1.0079.
5,250 / 1.0079 = 5,208.85 (Net Present Value)
Calculate the age of plants: Subtract the Job Start Date from the Period End Date.
07/31/2024 – 06/01/2024 = 60
Calculate the value of time by dividing plant age by avg. days to sell.
2 = 60 / 30
Multiply the Net Present Value by the value of time.
10,417.70 = 5,208.85 * 2
Fair Value Less Cost to Sell
The formula for Fair Value Less Cost to Sell in the context of the 365 vertical biological asset module is as follows:
Net Present Value = Total Estimated Yield X (Fair Value – Cost to Sell)
Example:
Running the calculation worksheet with a Period End Date of July 31, 2024.
10 plants of Lime Sherbert with a job start date of June 1, 2024, and the following fair value settings:
Calculate total estimated yield: 10 plants * estimated yield of 150 gr.
10 * 150 = 1,500 (Total estimated yield)
Calculate fair value amount: Fair value of 8.5 per GR less Cost to sell of 5 per GR multiplied by total estimated yield in GR.
8.5 – 5 = 3.5 (FVLCS per GR)
3.5 * 1,500 = 5,250 (Fair Value Amount)
5,250 = (10 X 150) X (8.5 – 5)
Expected Market Value of Crop
The formula for the Expected Market Value of Crop in the context of the 365 vertical biological asset module is as follows:
Net Present Value = Total Estimated Yield X Market Price
Example:
Running the calculation worksheet with a Period End Date of July 31, 2024.
10 plants of Lime Sherbert with a job start date of June 1, 2024, and the following fair value settings:
Market Item Setups:
Calculate total estimated yield: 10 plants * estimated yield of 150 gr.
10 * 150 = 1,500 (Total estimated yield)
Calculate Market Value: Yield of 1,500 grams multiplied by market cost of 2.20.
1,500 * 2.20 = 3,300
3,300 = 1,500 X 2.20