Abstract
Stochastic sensitivity analysis was used to examine a combined indoor fingerling and outdoor grow-out red drum aquaculture facility. Three important biological and three important economic factors were varied individually to determine the chance of survival (farm does not go bankrupt), and chance of economic success (net present value greater than zero). Because individuals have a different preference for risk, an investor must determine his own required rate of return (RRR) for his investment. For this reason, chances of economic success ranging from 5 to 20% are given in the results. If an investor's RRR is below 10%, he has a better chance of achieving economic success if the farm in 100% equity financed. If his RRR is greater than 10%, he has a better chance of achieving economic success if the farm is 50% equity financed. Finally, management capabilities have a tremendous impact on chances of economic success.
Published Version
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