A note on the effect of the discount rate and length of the accounting period on the economic value of genetic improvement in cattle populations

Abstract

SUMMARYThe discounted gene flow method was used to study the effect of varying financial discount rates and accounting period on the present value of the genetic merit conferred by each insemination.Over the range from 8% to 16%, each 1% increase in the discount rate reduces the value of the dairy and beef consequences of an insemination by about 5% and 4% respectively, Virtually all of the economic benefit arising from an insemination is complete within 20 years, with about 90% of it being realized in the first 10 years and 98% in the first 15 years.