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I I I I I I I I I I I I I I I I I I I 1182 Chapter 6 FINANCIAL A~ALYSIS INTRODUCTION The total estimated cost of the Amity System Improvement Project is $5.294.00D. The AHIC contribution is $1,071 ,000,' Therefore, a PL 984 loan of $4.223,000 is needed to finance the remaining costs. This chapter demonstrates financing ability by showing how project cost can be repaid according to PL 984 administrative guidelines utilizing the water users "ability to pay" for the rehabilitation program. PAYMENT CAPACITY Irrigation Irrigation payment capacity is the maximum amount available to the water users for payment of water costs after meeting certain priority claims on farm income. Excepted from these maximum available amounts are the costs included in farm budget analysis and farm expenses using current price indexes. The primary claims include the cost necessary to retain the farm such as taxes, operating cost, and a return to the operator's labor and management, Payment capacity for the land receiving irrigation water from the pro- ject is based on a repayment study performed jointly between AMIC, L & H Engineers, and the Lower Missouri Region, The net payment capacity is $5.77 per acre. The payment capacity was determined from the following farm budgets: (l) Agriculture Crops Payment Capacity Alfalfa. Milo and Wheat $14.86 minus assessments - $3.92/acre (2) Agriculture & Cattle Crops/Cattle Alfalfa. Milo. Wheat & Cattle Payment Capacity $18,19 minus assessments = $7.25/acre When weighted to represent the actual operation ~nder the ArlIC, a net payment capacity with the project of $5,77 per acre results. 6-1