Profitability vs. Feasibility and the Paradox of Purchasing Farmland

Profitability implies that the present value of the return flows over the life of the investment is greater than the present value of the cost flows over the life of the investment, where present value is the discounted (current) value of the flows. The cash inflows include annual returns from the investment, tax savings from depreciation and interest, and the salvage value, or selling price, of the asset at the conclusion of the investment.