2009 MISSOURI FFA FARM MANAGEMENT CONTEST Multiple Choice Section The Farm Management Contest is designed to test student understanding of the application of economic principles in farm management. Each question is worth three (3) points. Choose the best answer and mark the appropriate box on the score sheet provided. There is only one correct answer to each question. 1.

Pat Parker had a net farm income of $35,000. Pat had total business assets of $500,000 and total liabilities of $300,000. Pat paid $32,000 in interest. The rate of return on assets would be A. 6.4%. B. 7.0%. C. 13.4%. D. 17.5%. E. None of the above

2.

If corn costs $3.50 per bushel and has 13% moisture, and dried distillers grain with solubles (DDGS) costs $120/ton and has 10% moisture, and modified wet distillers grain with solubles (MWDGS) costs $55/ton and has 52% moisture, and wet distillers grain with solubles (WDGS) costs $38/ton and has 63% moisture, which has the lowest cost per pound of dry matter? A. Corn B. DDGS C. MWDGS D. WDGS E. Cannot determine

3.

If the Chicago Board of Trade website indicates today's open for the July corn futures contract was 372'6, what price is this? A. $372.6 per ton B. $372.6 per metric ton C. $3.726 per bushel D. $3.7275 per bushel E. None of the above

4.

A farmer purchases feeder pigs averaging 40 pounds each and sells them as slaughter hogs with an average weight of 270 pounds. The feed cost is $71.50 per hog. What is the feed cost per pound of gain? A. $0.265 B. $0.292 C. $0.311 D. $0.420 E. None of the above

5.

On February 1 Janice borrowed $5,000 to buy feeder pigs. On July 1 she repaid the $5,000 along with $204.17 interest. What annual interest rate did she pay? A. 9.80% B. 10.25% C. 11.33% D. 12.25% E. None of the above

6.

A cattle buyer purchases 40 head of steers which average 1,265 pounds for $79.40/cwt. He trucks them 352 miles to a slaughter plant where he sells them on a carcass basis for 125 cents per pound. His trucking and handling costs are $672. What average carcass weight does he need in order to break even? A. 806 pounds B. 811 pounds C. 817 pounds D. 896 pounds E. None of the above

7.

You are having a good business year and it looks as if taxable income is going to be a lot more than it was last year. Which of the following steps would be the best tax management before the end of the tax year? A. Buy $20,000 of feeders B. Postpone buying the $45,000 tractor until next year C. Buy $15,000 worth of fertilizer for the next crop year D. Sell 5,000 bushels of corn right now E. Put up a $15,000 pole barn this year

8.

The maximum Section 179 Expensing deduction for 2008 was A. $25,000. B. $100,000. C. $200,000. D. $250,000. E. None of the above

9.

A farmer who buys feeder pigs could use the options market to reduce his price risk by A. buying a hog Put option. B. selling a hog Put option. C. buying a hog Call option. D. selling a hog Call option. E. All of the above

10. Farmer Jones has $10,000 in equipment he uses exclusively for corn. He assumes that this equipment will last 5 years and have a salvage value of $0. He plans to plant 125 acres of corn each year. Assuming an interest rate of 10%, what will be his average fixed costs per year for the next 5 years (depreciation and interest) for his machinery per acre of corn? A. $15 B. $20 C. $24 D. $25 E. None of the above Use the following information to answer questions 11-13. Farmer Jones has received the following information for his tillage practices from the Soil Conservation Service: Corn after soybeans Soybeans after corn Soybeans after soybeans Wheat after soybeans Corn after wheat

(tons/acre/year) 8 T. 3 T. 12 T. 6 T. 4 T.

($/acre) $100 $100 $110 $80 $90

11. Which of the following crop rotations will average 5 tons or less of soil loss per acre per year? A. Corn-soybeans-wheat B. Corn-soybeans C. Corn-soybeans-soybeans D. Continuous soybeans E. None of the above

12. What will be the average cash returns for a corn-soybean-wheat crop rotation? A. $90 B. $93 C. $97 D. $100 E. None of the above 13. Which crop sequence would have the highest average annual cash returns? A. Corn-soybeans-wheat B. Corn-soybeans C. Corn-soybeans-soybeans D. Continuous soybeans E. Corn-soybeans-soybeans-wheat 14. The demand for food is usually considered an inelastic demand. implies that for a given percentage change in price, A. the percentage change in quantity demanded is less. B. the percentage change in quantity demanded is greater. C. the percentage change in quantity supplied is less. D. the percentage change in quantity supplied is more. E. None of the above

This

15. The demand for an item with many possible substitutes is _________ than the demand for an item with few substitutes. A. more elastic B. less elastic C. less D. more E. None of the above 16. The rate of return to equity will be highest when A. the interest rate on borrowed funds is less than the rate of return to assets. B. the interest rate on borrowed funds is equal to the rate of return to assets. C. the interest rate on borrowed funds is greater than the rate of return to assets. D. equity is 50% of total assets. E. None of the above 17. Which of the following statements regarding equity is not true? A. Equity = net worth B. Equity = total assets minus total liabilities C. Equity can be less than zero. D. Equity cannot be greater than total assets. E. Equity must always be less than total liabilities. 18. If the supply of a good is inelastic, a 10% change in the price of the good would produce a change in the quantity supplied of A. 10%. B. more than 10%. C. less than 10%. D. 0%. E. None of the above 19. The total consumer demand and producer supply of leechynuts were equal to 1 million nuts when the price was $1 per nut last year. This year the price is $1.25. Which of the following statements is true? A. More than 1 million leechynuts will be supplied. B. Less than 1 million leechynuts will be supplied. C. More than 1 million leechynuts will be demanded. D. Less than 1 million leechynuts will be demanded. E. Not enough information given to determine quantity supplied or demanded.

20. You are driving down a Missouri county road, exercising resonable care, when you run into a stray hog standing on the road. You suffer car damages of $3,500 and the hog (valued at $120) is dead. A. The hog owner is presumed to be negligent. B. You will have to prove the hog owner to have been negligent. C. You will have to pay the hog farmer for his hog. D. You can collect double damages if you can prove the hog owner failed to maintain lawful fences. E. None of the above 21. If an investment doubled in value in 10 years, its average annual return was A. 6.7%. B. 7.2%. C. 8.8%. D. 10.0%. E. None of the above 22. For tax A. B. C. D. E.

year 2008, the social security wage base was $94,000 $97,500 $102,000 $106,800 None of the above

23. For income tax purposes, depreciation charges are A. deducted from the total tax liability. B. added to investment credit. C. deducted from operating income. D. deducted from capital sales. E. None of the above 24. The farm return to land, labor, and capital for a year would be found on A. the balance sheet. B. the cash flow budget. C. the income statement. D. a partial budget. E. None of the above 25. Return to management is net cash farm income A. minus debt payments. B. minus the value of unpaid labor, depreciation, interest on equity capital, and net inventory changes. C. minus value of operator's labor and interest on debt payments. D. minus the interest on equity capital, depreciation, and adjustments for inventory changes. E. None of the above 26. How many total acres are included in the "SE 1/4 of the NW 1/4 and NE 1/4 of the SW 1/4 of Section 15, Twp. 10N, R4W of the 5th Principle Meridian"? A. 80 acres B. 120 acres C. 160 acres D. 240 acres E. None of the above 27. How much perimeter fence would be required to completely enclose the parcel of land described in the question above? A. 1.5 miles B. 2.0 miles C. 2.5 miles D. 3.0 mile E. None of the above

28. Return to operator's labor and management is net farm income A. minus debt payments. B. minus the value of operator's labor, depreciation, interest on equity capital, and debt payments. C. minus the value of operator's labor and interest on debt payments. D. minus the interest on equity capital. E. plus interest paid. 29. A farmer purchases 550-pound feeder steers for $1.10 per pound and plans to sell the steers at 750 pounds. The farmer estimates the total cost of gain to be 70 cents per pound. The nearest breakeven price when the steers are sold at 750 pounds is A. $79.14/cwt. B. $81.25/cwt. C. $99.33/cwt. D. $105.33/cwt. E. None of the above 30. Corn has an expected yield of 155 bushels per acre and a production cost of $300.00 per acre. Expected market prices are $4.00 per bushel for corn and $10.00 per bushel for soybeans. Soybeans can be raised at a production cost of $150 per acre. At what breakeven yield per acre would soybeans generate the same net return per acre as corn? A. 32.0 bushels B. 36.4 bushels C. 45.3 bushels D. 47.0 bushels E. None of the above 31. The effect of appreciation in an asset's value, such as an increase in land value A. will be accounted for by a larger cash income value in the cash flow statement. B. will be accounted for by smaller added expense figures in the cash flow statement because depreciation would not be subtracted. C. will be accounted for by smaller cash expense value in the cash flow statement. D. is not shown on the cash flow statement. 32. Inflation means A. a dollar will buy more in the future than it will buy today. B. the prices at which the interest rate will equal the inflation ratio. C. a farmer's profit margin will increase over time due to higher prices. D. a dollar will buy less in the future than it will buy today. 33. How many pounds of 48% protein soybean meal must be mixed with 8% protein corn to make a ton of 16% protein feed? A. 316 pounds B. 400 pounds C. 439 pounds D. 487 pounds E. None of the above 34. Corn and grain sorghum are substitutes for each other in many livestock feed rations. Assuming they are substitutes, a decrease in the supply of corn would cause the demand for grain sorghum to A. shift to the left. B. shift to the right. C. decrease. D. remain unchanged.

35. Accrued A. B. C. D. E.

interest on a balance sheet refers to interest that is past due. interest that has accumulated since the last loan payment. interest on short-term debt. interest forgiven by the lender. None of the above

36. A livestock producer wishing to use the futures market to hedge the price of cattle he anticipates selling in the future would initially A. buy futures contracts expecting to sell the contracts when he sells his cattle. B. buy futures contracts expecting to buy more contracts when he sells his cattle. C. sell futures contracts expecting to buy them back when he sells his cattle. D. sell futures contracts expecting to sell more contracts when he sells his cattle. 37. You have borrowed $40,000 at a simple annual interest rate of 10% per annum for 4 years. Principal is to be repaid in 4 equal installments at the end of each year, with annual interest payable with the principal payment. The payment due at the end of the first year would be A. $4,000 B. $10,000 C. $14,000 D. $44,000 E. None of the above 38. Capital used in a farmer's beef breeding herd could be invested in stocks, bonds, land, or some other asset. This illustrates the principal of A. marginal cost. B. fixed cost. C. opportunity cost. D. variable cost. E. alternative cost. 39. A soybean producer decides to store his soybeans in the local elevator for five months. The price at harvest is $9.00 per bushel and the elevator charges 2 cents per bushel per month for storage plus a 5 cents per bushel handling charge. He has 5,000 bushels to sell and must borrow $45,000 at 8% annual interest while he stores the soybeans. What price must he receive for his soybeans to break even and cover his storage and opportunity costs? A. $9.15 B. $9.30 C. $9.45 D. $9.87 E. None of the above 40. In a livestock A. should B. should C. should D. should

enterprise budget prepared on July 1, home-grown feed not be included as a cost. be included, valued at its net market price. be included valued at its cost of production. be valued at past year's inventory value.

41. The law of supply states that A. as a product price increases, consumed. B. as a product price increases, consumed. C. as product price increases, a supplied. D. as product price decreases, a supplied. E. None of the above

a larger quantity will be a smaller quantity will be smaller quantity will be smaller quantity will be

Indicated below are data for the feed production response of slaughter hogs. It will be used for Questions 42-44. Production level 1 2 3 4 5 6

Weight of hogs (pounds) 190 210 230 250 270 290

Feed fed (pounds) 722 819 920 1030 1150 1294

42. Suppose the cost of the mixed hog feed is $150 per ton. The expected hog price is $47 per hundredweight. What is the profit maximizing level of production (assuming all other costs are constant and the hog price does not change as weight changes). A. Level 2 B. Level 3 C. Level 4 D. Level 5 E. Level 6 43. If hog prices and feed costs both double, what impact will that have on the profit maximizing level of production (assuming all other costs are constant)? A. Sell hogs at a heavier weight B. Sell hogs at a lighter weight C. No impact, will stay at same level 44. With hogs at $50/cwt., how high would the cost of a pound of hog feed have to be before you would produce a 250-pound hog rather than a 270pound hog? A. above 8.0 cents B. above 8.3 cents C. above 8.7 cents D. above 9.0 cents E. above 10.0 cents 45. The Universal Soil Loss Equation estimates soil erosion in tons per acre per year = R (rainfall factor) x K (soil erodibility factor) x LS (combination of slope percentage and slope length) x C (crop management factor) x P (conservation practice factor). The P factor for contour farming is 0.5. This indicates A. Contour farming causes 0.5 tons of soil loss per acre per year. B. Contour farming increases soil loss by 50% per acre per year. C. Contour farming reduces soil loss by 50% per acre per year. D. Contour farming would have no impact on the Universal Soil Loss Equation estimate. E. Contour farming would reduce yields by 50% per acre per year. 46. A deduction that allows an owner or operator to account for the reduction of a product's reserves is called A. depreciation. B. depletion. C. amortization. D. investment credit. E. None of these

47. If anhydrous ammonia (NH3) is 82.3% nitrogen by weight and is selling for $800 per ton, what is the cost per pound of actual N? A. $0.53 B. $0.49 C. $0.40 D. $0.33 E. None of the above 48. The carcass weight of a hog usually averages 76% of the live weight at the time of slaughter. If it costs 50 cents per pound to raise a hog to slaughter, what is the breakeven carcass price? A. $38.00/cwt. B. $65.79/cwt. C. $68.20/cwt. D. $72.37/cwt. E. None of the above 49. Understating the amount of debt on a net worth statement results in A. a smaller net worth figure than should be. B. lower interest costs. C. a smaller debt-to-equity ratio. D. None of the above 50. Which of the following can influence the value of land? A. Its productivity potential B. Location C. Interest rates D. Inflation rates E. All of the above

2009 MISSOURI FFA FARM MANAGEMENT CONTEST Problems Section Choose the best answer and mark the corresponding numbered space on the answer sheet. Computations may be done in the margins or on the back of the paper. Each question is worth four (4) points. There is only one correct answer for each question. Answers have been rounded. PROBLEM I - Market Value Balance Sheet Using the information below, complete the net worth statement for January 1, 2009: Land . . . . . . . . . . . . . . . . . . . . . . . . . . $650,000 House . . . . . . . . . . . . . . . . . . . . . . . . . . 120,000 Machinery and equipment . . . . . . . . . . . . . . . . . 212,000 Cows . . . . . . . . . . . . . . . . . . . . . . . . . . 51,000 Calves . . . . . . . . . . . . . . . . . . . . . . . . . 18,600 Accounts payable. . . . . . . . . . . . . . . . . . . . . 7,562 Autos . . . . . . . . . . . . . . . . . . . . . . . . . . 47,000 Sows and boars. . . . . . . . . . . . . . . . . . . . . . 40,000 Market hogs . . . . . . . . . . . . . . . . . . . . . . 130,000 Checking and savings. . . . . . . . . . . . . . . . . . . 17,800 Soybeans. . . . . . . . . . . . . . . . . . . . . . . . . 22,000 Hog buildings . . . . . . . . . . . . . . . . . . . . . . 55,000 Feed and hay. . . . . . . . . . . . . . . . . . . . . . . 12,500 Operating loan balance. . . . . . . . . . . . . . . . . . 98,000 Accounts receivable . . . . . . . . . . . . . . . . . . . 500 Accrued interest owed . . . . . . . . . . . . . . . . . . 24,740 Accrued taxes owed. . . . . . . . . . . . . . . . . . . . 9,700 30-year land loan balance is $320,000. $16,000 plus interest is due March 1 of each year. 7-year tractor loan balance is $26,000. $6,500 plus interest is due November 30 of each year. 30-year home loan balance is $52,500. $500 plus interest is due each month. Current Assets: ________________________________ ________________________________ ________________________________ ________________________________ ________________________________ ________________________________ ________________________________ ________________________________ ________________________________ Total _________________

Current Liabilities: __________________________________ __________________________________ __________________________________ __________________________________ __________________________________ __________________________________ __________________________________ __________________________________ __________________________________ Total __________________

Non-current Assets: Non-current Liabilities: ________________________________ __________________________________ ________________________________ __________________________________ ________________________________ __________________________________ ________________________________ __________________________________ ________________________________ __________________________________ ________________________________ __________________________________ ________________________________ __________________________________ ________________________________ __________________________________ Total ________________ Total __________________ Total Assets _________________ Total Liabilities _______________ Net Worth

_________________

Questions 1 through 7 refer to PROBLEM I 1.

The total value of current assets on January 1, 2009, was A. $200,900 B. $201,400 C. $241,400 D. $292,400 E. None of the above

2.

The total value of non-current assets was A. $1,084,000 B. $1,124,000 C. $1,135,000 D. $1,175,000 E. None of the above

3.

The total value of current liabilities was A. $42,002 B. $70,502 C. $163,002 D. $168,502 E. None of the above

4.

The total value of non-current liabilities was A. $370,000 B. $375,500 C. $468,000 D. $473,500 E. None of the above

5.

The net A. B. C. D. E.

6.

The current ratio was A. 0.84 B. 1.20 C. 2.86 D. 3.28 E. None of the above

7.

What would the value of farm production need to be in order to have a capital turnover ratio of 0.3? A. $118,810 B. $135,310 C. $412,920 D. $873,200 E. None of the above

worth was $873,512 $1,005,090 $1,257,000 $1,468,400 None of the above

PROBLEM II -- Enterprise Budget Use the following wheat budget to answer Questions 8 through 16. WHEAT, per acre _______________________________________________________________________ Operating Inputs Units Price Qty. Value Your Value Wheat seed Bu. 10.500 1.666 $ 17.49 __________ Fertilizer Lbs. 0.900 140.000 126.00 __________ Lime Ton 20.000 0.250 5.00 __________ Insecticide/fungicide Oz. 2.000 9.000 18.00 __________ Herbicide Oz. 20.000 0.300 6.00 __________ Rent fert. spreader Acre 2.440 1.000 2.44 __________ Annual operating capital Dol. 0.085 94.100 8.00 __________ Machinery labor Hour 10.000 1.000 10.00 __________ Other labor Hour 10.000 0.250 2.50 __________ Mach. fuel, lube, repair Dol. 20.49 __________ Total operating costs $215.92 __________ Fixed costs, machinery Interest Depr., taxes, insurance Total fixed costs

Dol. Dol.

Production Wheat Small grain pasture Total receipts

Bu. AUMs

0.085

6.00 11.00

171.41

14.57 23.38 37.95

__________ __________ __________

55.00 1.

330.00 11.00 341.00

__________ __________ __________

Returns above total operating costs 125.08 __________ Returns above all specified costs 87.13 __________ _______________________________________________________________________ 8. Total operating cost per acre is: A. $87.13 B. $94.10 C. $125.08 D. $215.92 E. None of the above 9. The return above operating cost per acre is: A. $87.13 B. $94.10 C. $125.08 D. $215.92 E. None of the above 10. The budget includes no government payments. of wheat, the most likely payment would be A. fixed (direct) payment. B. counter-cyclical payment. C. loan deficiency payment. D. trigger price payment. E. No government payment is likely 11. What is A. B. C. D. E.

Given the expected price

the total budgeted interest cost per acre? $2.44 $14.57 $22.57 $37.95 None of the above

12. What price per bushel is paid for seed wheat? A. $6.00 B. $10.50 C. $17.49 D. $55.00 E. None of the above 13. What is the total specified fertilization cost per acre? (ignore cost of labor and operating capital) A. $40.00 B. $126.00 C. $131.00 D. $133.44 E. None of the above 14. The budget includes no charge for land. If one-third of the crop is given as rent, what price received for wheat will make the per acre receipts above all specified costs equal zero? A. $6.14 B. $6.62 C. $6.92 D. $7.30 E. None of the above 15. What yield will cause returns above all specified costs to equal zero if $70/acre is paid for land rent? A. 52.15 bu. B. 53.98 bu. C. 55.07 bu. D. 58.89 bu. E. None of the above 16. What will be the per acre returns above all specified costs if onethird of the 55-bushel crop is given to the landlord for rent of the land and no grazing occurs? A. -$33.87 B. -$22.87 C. -$3.13 D. $17.13 E. None of the above

PROBLEM III -- Income Tax Management Use the tables at the end of this exam to calculate depreciation on the following item. On May 1, 2008, Mark bought a new tractor. Mark traded his old tractor which had a remaining book value of $7,155. Mark paid $25,000 "down" and financed the remaining $30,000 over 5 years at 8% interest. He elected to roll the remaining basis of his old tractor into the new one. 17. The tractor is A. 3-year property B. 5-year property C. 7-year property D. 10-year property E. None of the above 18. If Mark does not expense any of the cost of the tractor, then 2008 depreciation will be (use regular MACRS and mid-year convention) A. $3,445.09 B. $4,949.30 C. $5,892.70 D. $6,659.29 E. None of the above 19. If Mark expenses $10,000 of the tractor cost and uses the midquarter convention and regular MACRS, then 2008 depreciation will be A. $1,339.30 B. $5,587.89 C. $6,985.12 D. $9,779.06 E. None of the above 20. If Mark expenses the maximum allowable on the tractor and uses regular MACRS with the mid-year convention, then 1/1/09 remaining book value will be A. $0 B. $766.59 C. $3,445.09 D. $6,388.41 E. None of the above 21. If Mark does not claim an expense deduction and uses the mid-quarter convention and straight line depreciation over the alternate MACRS life, his 2008 depreciation will be A. $3,107.75 B. $3,884.69 C. $4,439.64 D. $5,549.55 E. None of the above 22. Under MACRS, a farm fence is classified as A. 3-year property B. 5-year property C. 7-year property D. 10-year property E. None of the above

PROBLEM IV -- Supply and Demand

The above graph represents supply of pork for import into the U.S. (SF) the supply of pork produced in the U.S. (SUS), the total supply of pork in the U.S. (ST), the foreign demand for U.S. pork (DF), the domestic demand for pork (DUS), and the total demand for pork (DT) in the U.S. 23. What is A. B. C. D. E.

the market equilibrium price of pork in the U.S.? P1 P2 P3 P4 None of the above

24. At the market equilibrium price, how much pork will be imported from the U.S.? A. Q1 B. Q2 C. Q3 D. Q4 E. Q5 25. At the market equilibrium price, how much pork will be consumed in the U.S.? A. Q1 B. Q2 C. Q3 D. Q4 E. Q5 26. At what A. B. C. D. E.

price would pork imports equal pork exports? P1 P2 P3 P4 None of the above

For questions 27 and 28, assume the value of the U.S. dollar strengthens with respect to the currency of other major pork trading countries. 27. The change will cause the U.S. pork exports to A. increase. B. decrease. C. not change. D. None of the above 28. As the dollar strengthens, U.S. equilibrium price of pork should A. increase. B. decrease. C. stay the same. D. None of the above

PROBLEM V - Marketing On July 10, a farmer has 10,000 bushels of wheat in his bins. He sells it on January 15. Ignore commissions, storage cost, and interest. July 10 quotes: March futures price = $6.50 Expected basis = $0.10 under the board Strike price $6.10 $6.20 $6.30 $6.40 $6.50 $6.60 29. What is A. B. C. D. E.

---- Premiums ---Call Put $0.73 $0.01 $0.63 $0.02 $0.53 $0.03 $0.43 $0.08 $0.33 $0.15 $0.24 $0.24

January 15 quotes: March futures price = $6.00 Basis = $0.05 under the board ---- Premiums ---Call Put $0.58 $0.01 $0.48 $0.02 $0.38 $0.04 $0.28 $0.11 $0.19 $0.19 $0.12 $0.29

the cash price of wheat on January 15? $5.95 $6.00 $6.05 $6.10 None of the above

30. If the farmer sold two March futures contracts on July 10 and bought back the contracts on January 15, what would be the realized price per bushel (cash + net on futures) for the wheat? A. $6.35 B. $6.40 C. $6.45 D. $6.50 E. None of the above 31. If the farmer bought two $6.40 Puts on July 10 and sold the Puts on January 15, what would be the realized price per bushel (cash + net on options) for his wheat? A. $5.90 B. $5.92 C. $5.98 D. $6.00 E. None of the above 32. If the farmer bought two $6.40 Puts and sold two $6.40 Calls on July 10, and sold the Puts and bought back the Calls on January 15, what would be the realized price per bushel (cash + net on options) for his wheat? A. $6.05 B. $6.13 C. $6.20 D. $6.25 E. None of the above 33. Given all the information above, which of the following actions taken on July 10 turned out to be the most profitable? A. Selling two futures contracts. B. Buying two $6.40 Put options. C. Buying two $6.40 Puts and selling two $6.40 Calls. D. Selling the wheat on July 10. E. Taking no market action.

PROBLEM VI - Loan Payments Loan Amortization: in equal payments.

Period 1 2 3 4 5 6 7

You have a $25,000 loan to be paid back over 10 periods

Outstanding Principal before Payment $25,000.00 $23,274.26 $21,410.46 $19,397.56 C $14,875.77 $12,340.10

Loan Payment

Payment Portion Interest

Payment Portion Principal

$3,725.74 $3,725.74 $3,725.74 $3,725.74 $3,725.74 $3,725.74 $3,725.74

A $1,861.94 $1,712.84 $1,551.80 $1,377.89 $1,190.07 $ 987.21

$1,725.74 $1,863.80 B $2,173.94 $2,347.85 D $2,738.53

34. The value of A is A. $1,933.61 B. $1,957.29 C. $1,986.14 D. $2,000.00 E. None of the above 35. The value for B is A. $1,989.13 B. $2,000.77 C. $2,012.90 D. $2,087.05 E. None of the above 36. The value for C is A. $16,951.88 B. $17,223.62 C. $17,317.19 D. $17,846.25 E. None of the above 37. What interest rate is used for this loan? A. 7.00% B. 7.75% C. 8.00% D. 17.74% E. None of the above 38. Using the interest rate in the table on the previous page as the discount rate, what is the present value of an annuity of $3,725.74 for 8 years? A. $19,397.56 B. $20,519.66 C. $21,410.46 D. $29,805.84 E. None of the above 39. At the beginning of last year, a farmer had an outstanding loan for $192,750. The interest rate was 8% APR. If the farmer made one loan payment at the end of the year of $30,000, what was the outstanding balance at the end of the year? A. $17,398 B. $178,170 C. $199,873 D. $204,228 E. None of the above

PROBLEM VII - Diminishing Returns A farmer is looking at a precision ag firm that can apply fertilizer in 10 lb. increments. The cost of fertilizer is $0.80/lb. Corn is selling for $3.80 per bushel. He has one field that is a mix of Soils A and B. The field is 80 acres with 30 acres of Soil A and 50 acres of Soil B. He has determined that his yields will respond according to the following table. Fertilizer lbs./ac. 120 130 140 150 160 170

Soil A yld. bu./ac. 100 105 108 110 111 112

Soil B yld. bu./ac. 120 128 134 138 141 143

40. How much fertilizer should he apply per acre if he fertilizes the entire field based on Soil Type A? A. 130 lbs. B. 140 lbs. C. 150 lbs. D. 160 lbs. E. None of the above 41. What are his net returns above fertilizer cost for the entire field if he fertilizes the entire field based on Soil A? A. $28,407 B. $28,812 C. $29,204 D. $29,668 E. None of the above 42. How much fertilizer should he apply per acre if he fertilizes the entire field based on Soil Type B? A. 140 lbs. B. 150 lbs. C. 160 lbs. D. 170 lbs. E. None of the above 43. What are his net returns above fertilizer cost for the entire field if he fertilizes the entire field based on Soil B? A. $28,407 B. $28,812 C. $29,204 D. $29,668 E. None of the above 44. What are his returns above fertilizer costs for the entire field if he fertilizes by applying the profit maximizing amount on each soil type? A. $29,342 B. $29,688 C. $30,015 D. $30,767 E. None of the above

PROBLEM VIII - Cost Analysis A local business can produce up to 7 widgets per hour. The partially completed table below shows some of their cost data. Complete the cost table then answer questions 45-50. Round all numbers to the nearest tenth. : : : : :Average: Average : : : Total : Fixed :Variable: Total : Fixed : Variable :Marginal: Quantity : Cost : Cost : Cost : Cost : Cost : Cost : Cost : _________:_______:_______:________:_______:_______:__________:________: 0 ---------:-------:-------:--------:-------:-------:----------:--------1 A 7 ---------:-------:-------:--------:-------:-------:----------:--------2 65 15 ---------:-------:-------:--------:-------:-------:----------:--------3 8 F ---------:-------:-------:--------:-------:-------:----------:--------4 B D 11 ---------:-------:-------:--------:-------:-------:----------:--------5 100 E ---------:-------:-------:--------:-------:-------:----------:--------6 70 C ---------:-------:-------:--------:-------:-------:----------:--------7 21 ---------:-------:-------:--------:-------:-------:----------:--------45. What is the value of A? A. 25 B. 30 C. 40 D. 50 E. None of the above 46. What is the value of B? A. 74 B. 80 C. 85 D. 90 E. None of the above 47. What is the value of C? A. 16 B. 18 C. 20 D. 22 E. None of the above 48. What is the value of D? A. 10.0 B. 12.5 C. 15.0 D. 20.0 E. None of the above 49. What is the value of E? A. 7 B. 8 C. 9 D. 10 E. None of the above

50. What is the value of F? A. 8 B. 9 C. 10 D. 11 E. None of the above

ANNUAL DEPRECIATION PERCENTAGES FOR 5-YR PROPERTY, 150% DB _________________________________________________________________ MID-QUARTER CONVENTION Tax MID-YEAR Quarter placed in service -Year CONVENTION 1 2 3 4 1 15.000% 26.250% 18.750% 11.250% 3.750% 2 25.500 22.125 24.375 26.625 28.875 3 17.850 16.520 17,062 18.637 20.212 4-5 16.660 16.520 16.763 16.567 16.404 6 8.330 2.065 6.287 10.354 14.355 Total 100.000 100.000 100.000 100.000 100.000 _________________________________________________________________ ANNUAL DEPRECIATION PERCENTAGES FOR 7-YR PROPERTY, 150% DB _________________________________________________________________ MID-QUARTER CONVENTION Tax MID-YEAR Quarter placed in service -Year CONVENTION 1 2 3 4 1 10.714% 18.750% 13.393% 8.036% 2.679% 2 19.133 17.411 18.559 19.707 20.854 3 15.033 13.680 14.582 15.484 16.386 4 12.249 12.160 12.221 12.275 12.874 5-7 12.249 12.160 12.221 12.275 12.182 8 6.124 1.520 4.582 7.673 10.661 Total 100.000 100.000 100.000 100.000 100.000 _________________________________________________________________ ANNUAL FRACTIONS FOR STRAIGHT LINE OVER N YEARS (N less than 26) _________________________________________________________________ MID-QUARTER CONVENTION Tax MID-YEAR Quarter placed in service -Year CONVENTION 1 2 3 4 1 1/2 7/8 5/8 3/8 1/8 2-N 1 1 1 1 1 N+1 1/2 1/8 3/8 5/8 7/8 _________________________________________________________________ Depreciation formula: Basis divided by N times number from above table. ANNUAL FRACTIONS FOR 27 1/2 YEAR PROPERTY, REGULAR MACRS _________________________________________________________________ Tax Month Placed in Service -Year 1 2 3 4 5 6 7 8 9 10 11 12 1 11.5 10.5 9.5 8.5 7.5 6.5 5.5 4.5 3.5 2.5 1.5 0.5 2-27 12 12 12 12 12 12 12 12 12 12 12 12 28 6.5 7.5 8.5 9.5 10.5 11.5 12 12 12 12 12 12 29 ------- 0.5 1.5 2.5 3.5 4.5 5.5 _________________________________________________________________ Depreciation formula: Basis divided by 27 1/2 divided by 12 times number from above table. ANNUAL FRACTIONS FOR 39 YEAR PROPERTY, REGULAR MACRS _________________________________________________________________ Tax Month Placed in Service -Year 1 2 3 4 5 6 7 8 9 10 11 12 1 11.5 10.5 9.5 8.5 7.5 6.5 5.5 4.5 3.5 2.5 1.5 0.5 2-39 12 12 12 12 12 12 12 12 12 12 12 12 40 0.5 1.5 2.5 3.5 4.5 5.5 6.5 7.5 8.5 9.5 10.5 11.5 _________________________________________________________________ Depreciation formula: Basis divided by 39 divided by 12 times number from above table.

******************************************************************** 2009 STATE FFA FARM MANAGEMENT CONTEST Key Multiple 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Choice C D D C A C C D A B

11. 12. 13. 14. 15. 16. 17. 18. 19. 20.

A A D A A A E C E A

21. 22. 23. 24. 25. 26. 27. 28. 29. 30.

B C C C B A A D C D

31. 32. 33. 34. 35. 36. 37. 38. 39. 40.

D D B B B C C C C B

41. 42. 43. 44. 45. 46. 47. 48. 49. 50.

D D C B C B B B C E

Problems 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

B D D A E B C D C A

11. 12. 13. 14. 15. 16. 17. 18. 19. 20.

C B D B A A C D C D

21. 22. 23. 24. 25. 26. 27. 28. 29. 30.

B C C B C D B B A C

31. 32. 33. 34. 35. 36. 37. 38. 39. 40.

C B A D C B C C B B

41. 42. 43. 44. 45. 46. 47. 48. 49. 50.

B C C A D C C B D B