WEEKLY LEARNING LOG

AAE 111 2nd SEM 2020-2021

Name: Franchesca Dyne Romarate

Section: AAE 111-S
Applicable Week: May 24-28
Chapter Studied: Chapter 6
Coverage: Capital Management

I have learned that:

In our previous discussions, it was indicated that part of farm management

consisted of the management of the resources that are accessible, including land,
labor, capital, and entrepreneurship, due to scarcity and resources’ alternative
uses. Also, the use of these resources involves costs. Farmers, therefore, must be
well-versed in how to manage these resources in order to minimize expenses and
increase profits. In this chapter, I have learned about the management of capital as
a resource.

Capital can be put to many different uses. It can be used to purchase production
inputs as well as, more importantly, farm machinery and other investment products.
As a result, its use or misuse has a substantial impact on farm performance. Capital
might come from the owner's equity capital, an external donation, or borrowing.
Credit is a crucial source of money and can take the form of a range of loan kinds.
Loans are classified according to their payback length, use, security requirement,
and repayment plan. Loan repayment can be done in the form of a single payment
or an annual amortization. The farmer should select and combine diverse capital
sources so that the total cost of his capital demand is minimized. As a result, the
farmer should select the capital source with the lowest cost and match it to his
risk-taking behavior. If the farmer considers that utilizing their own money
constitutes a large risk, they may choose to take out a loan.

I have a question about: