2000 Missouri FFA
Farm Management Contest
2002 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. For tax year 2001, the social security wage base was
A. $73,300
B. $76,200
C. $80,400
D. $84,100
E. None of the above
2. A farmer purchases 550-pound feeder steers for 95 cents per pound and
plans to sell the steers at 750 pounds. The farmer estimates the total
cost of gain to be 40 cents per pound. The nearest breakeven price when
the steers are sold at 750 pounds is
A. 64.75 cents/pound
B. 73.75 cents/pound
C. 80.33 cents/pound
D. 81.25 cents/pound
E. None of the above
3. How many total acres are included in the "S 1/2 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
4. 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
5. The two primary methods of describing the size and location of farmland
are rectangular survey and
A. angle and distance.
B. differential elevation.
C. border calibration.
D. metes and bounds.
E. None of the above
6. How many acres are in a quarter section of land?
A. 40 acres
B. 160 acres
C. 640 acres
D. 1,000 acres
E. None of the above
7. A producer decides to store his corn in the local elevator for 4 months.
The price at harvest is $2.00 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 $30,000 at 9%
annual interest while he stores the corn. What price must he receive for
his corn to break even and cover his storage and opportunity costs?
A. $2.00
B. $2.13
C. $2.19
D. $2.31
E. None of the above
8. How many square feet are in an acre?
A. 5,280
B. 12,250
C. 43,560
D. 100,000
E. None of the above
9. A acre equals
A. 0.40 hectares
B. 1.74 hectares
C. 2.47 hectares
D. 5.05 hectares
E. None of the above
10. A decrease in the value of the U.S. dollar relative to the currency of
other countries should result in
A. more costly imports.
B. less costly imports.
C. decreased exports.
D. no effect on imports or exports.
E. None of the above
11. The term "exchange rate" refers to
A. how much of one currency is needed to acquire a unit of another
currency.
B. how much principal is reduced by payments on an amortized loan.
C. the ratio between current and long-term debt.
D. the difference in value between a dollar today and a dollar one
year from today.
E. None of the above
12. A cord is a stack of wood measuring
A. 2' x 4' x 4'
B. 4' x 4' x 4'
C. 4' x 4' x 8'
D. 4' x 8' x 8'
E. None of the above
13. Farmer Brown has a debt-to-asset ratio of 47%. His debt-to-equity ratio
must be
A. negative.
B. 53%.
C. Less than 100%.
D. Greater than 100%.
E. None of the above
14. For an amortized loan, the amount of interest in the first payment will
be
A. more than the amount of the principal.
B. less than the amount of the principal.
C. equal to the amount of the principal.
D. dependent on the length of the loan.
E. None of the above
15. How many pounds of 48% protein soybean meal must be mixed with 10%
protein wheat to make a ton of 18% protein feed?
A. 211 pounds
B. 421 pounds
C. 439 pounds
D. 487 pounds
E. None of the above
16. A $1 deductible expense (before tax) will cost ______ after tax if the
farmer's marginal tax rate is 35%.
A. $0.35
B. $0.50
C. $0.65
D. $1.00
E. None of the above
17. A farmer began the year with an outstanding balance of $50,000 on his
operating loan and accrued interest of $500 on the loan. The loan
carries an interest rate of 10% on outstanding principal. Six months
later he makes a $2,500 payment on the loan. After this payment he will
have an accrued interest of
A. $0.
B. $500.
C. $1,000.
D. $2,000.
E. None of the above
18. A farmer has a debt/worth ratio of 1:2. The current liabilities total
$30,000 and the non-current liabilities total $90,000. What is the value
of the assets?
A. $420,000
B. $360,000
C. $240,000
D. $120,000
E. None of the above
19. A feedlot operator purchases a pen of 100 feeder steers with an average
weight of 780 pounds and sells them at an average weight of 1081 pounds.
Total feed cost for the pen is $15,500. Feed cost per pound of gain is
equal to
A. $0.440
B. $0.515
C. $0.649
D. $0.720
E. None of the above
20. A producer sells 12 feeder steers for $80/cwt. The average weight per
steer is 752 pounds. There is a 2% sales commission and yardage fees of
$2.10 per head. The net amount received for the pen of steers would be
A. $6,027.60
B. $6,028.36
C. $6,958.80
D. $7,049.62
E. None of the above
21. How many gallons of water must be mixed with a pint of herbicide to make
a 1% solution?
A. 12.375
B. 12.500
C. 25.000
D. 99.000
E. None of the above
22. A metric ton weighs
A. 1876.3 pounds
B. 2000.0 pounds
C. 2204.6 pounds
D. 2520.3 pounds
E. None of the above
23. Which is heavier, a bushel of shelled corn or a bushel of soybeans?
A. Shelled corn
B. Soybeans
C. They weigh the same.
D. Depends on whether measured in pounds or kilograms.
E. None of the above
24. If the interest rate is 10%, what is the present value of a dollar to be
received by a producer two years from now?
A. $0.826
B. $0.900
C. $1.100
D. $1.210
E. None of the above
25. The cost of producing one additional unit of output is called
A. opportunity cost.
B. substitution cost.
C. average cost.
D. marginal cost.
E. None of the above
26. A farmer has total assets of $500,000 of which land is $300,000. The
farmer's debt:equity ratio is 1.0. What will the farmer's debt:equity
ratio be if his land goes up in value by 10%?
A. .64
B. .89
C. 1.14
D. 1.22
E. None of the above
27. A grain farmer who normally stores his soybeans at a local elevator has
decided to use the options market to create a synthetic storage. To do
so he will sell his beans at harvest and
A. buy a put option.
B. sell a put option.
C. buy a call option.
D. sell a call option.
28. Corn has an expected yield of 120 bushels per acre and has a production
cost of $175.00 per acre. Current market prices are $2.00 per bushel for
corn and $5.25 per bushel for soybeans. Soybeans can be raised at a
production cost of $110 per acre. At what breakeven yield per acre would
soybeans generate the same net return per acre as dryland corn?
A. 33.3 bushels
B. 35.2 bushels
C. 38.7 bushels
D. 42.0 bushels
E. None of the above
29. A cattle feeder, wishing to use futures markets to hedge the price of
slaughter cattle, would at the time of his cattle purchase
A. buy futures contracts expecting to sell the contracts when selling
cattle.
B. sell futures contracts expecting to sell more contracts when
selling cattle.
C. sell futures contracts expecting to buy contracts when selling
cattle.
D. buy futures contracts expecting to buy more contracts when selling
cattle.
E. All of the above
30. The demand curve shows the relationship between
A. consumer tastes and the quantity demanded.
B. price and the quantity demanded.
C. price and production costs.
D. money income and quantity demanded.
E. None of the above
31. During the year, a farmer pays $1,850 principal and $500 interest on a
tractor loan. His annual depreciation is $2,000. His deductible
operating expenses (fuel, oil, repairs, etc) associated with operating
the tractor totaled $500. His marginal tax rate is 25%. What is his
after-tax cash cost of using the tractor for the year?
A. $ 750
B. $2,100
C. $2,050
D. $3,600
E. None of the above
32. If the total cost of producing 100 units of output is $500 and the
average variable cost is equal to $1, then which of the following
statements is true?
A. Total variable cost of the 100 units is $400.
B. Total fixed cost is equal to $100.
C. Average fixed cost is equal to $4.
D. Average total cost is equal to $4.
E. None of the above is true.
33. Farmer Jones wants to plant a crop with a 4-in spacing in 30-inch rows.
If there are 80,000 seeds in a bushel, how many bushels will he seed per
acre.
A. 0.24
B. 0.52
C. 0.65
D. 1.07
E. None of the above
34. Last year, Pat Parker had net farm income of $25,000. Pat had total
business assets of $850,000 and total liabilities of $350,000. Pat paid
$30,000 in interest. Rate of return on equity would be
A. 2.9%
B. 5.0%
C. 6.5%
D. 11.0%
E. None of the above
35. The best measure of a firm's ability to make a short-term loan payment is
A. debt/asset ratio.
B. solvency ratio.
C. current ratio.
D. leverage ratio.
E. net capital ratio.
36. If the U.S. wheat industry has an inelastic demand curve, a decrease in
the amount of wheat supplied to the market would
A. have no effect on total revenues in the wheat industry.
B. increase the total revenues in the wheat industry.
C. decrease the total revenues in the wheat industry.
D. cause a sharp increase in the demand for wheat.
E. None of the above
37. A trader with a long position in the futures market
A. profits when prices go down, loses when prices go up.
B. profits when prices neither go up nor down.
C. profits when prices go up, loses when prices go down.
D. loses when prices neither go up nor down.
E. cannot lose money.
38. Livestock, stored grain, land, and personal property used to secure a
loan are
A. collateral.
B. inventory.
C. liabilities.
D. net worth.
E. Illiquid.
39. Which of the following is not a supply shifter for farm products?
A. weather
B. new technology
C. government programs
D. consumer income
E. None of the above
40. The Pig Palace Custom Feedlot purchased a group of feeder pigs weighing
50 pounds each and sold them weighing 260 pounds after feeding them for
120 days. Each pig ate 630 pounds of feed during the feeding period.
Average daily gain for each pig in the group during the feeding period
was
A. 1.67 pounds per day.
B. 1.75 pounds per day.
C. 2.08 pounds per day.
D. 2.17 pounds per day.
E. None of the above
41. Cooperatives pay patronage refunds according to
A. one man, one vote.
B. size of farm.
C. amount of business done by patron.
D. total assets.
E. All of the above
42. For a trader who is short in the market, a standing order to buy should
the futures price move above a certain level is called a
A. stop order.
B. limit order.
C. permanent block.
D. hedge.
E. None of the above
43. On March 1, Sue borrows $50,000 to be paid back in December and puts it
in her checking account. This will cause her current ratio to
A. increase.
B. decrease.
C. not change.
D. Any of the above
E. None of the above
44. Interest rates go up, causing Jack's annual interest expense to increase
from $12,000 to $14,000. This will cause his rate of return on equity to
A. increase.
B. decrease.
C. not change.
D. Any of the above
E. None of the above
45. Crop prices decline, causing Marcia's sales income to decline while
leaving her cash operating expenses unchanged. This will cause her
capital turnover to
A. increase.
B. decrease.
C. not change.
D. Any of the above
E. None of the above
46. The ability of larger firms to be more profitable than smaller firms in
the same industry is an example of
A. diminishing returns.
B. imperfect competition.
C. inelastic supply.
D. economies of size.
E. None of the above
Use the following information to answer questions 47-50.
The national average loan rate for soybeans under the 1996 FAIR Act is
$5.26/bushel. Assume on October 15:
1. Johnny harvests 1,000 bushels of soybeans.
2. The local elevator is bidding $4.50/bushel for soybeans.
3. The posted county price (PCP) for soybeans is $4.48/bushel.
47. If on October 15 Johnny sells his beans at the local elevator and
collects the soybean loan deficiency payment, we will receive a total of
A. $4.48/bushel.
B. $4.50/bushel.
C. $5.26/bushel.
D. $5.28/bushel.
E. None of the above
48. If on October 15 Johnny decides to store his soybeans but to go ahead and
collect the loan deficiency payment, he will get a government check for
A. $0.76/bushel.
B. $0.78/bushel.
C. $4.48/bushel.
D. $5.26/bushel.
E. None of the above
49. If Johnny collects his loan deficiency payment on October 15 but stores
his beans until December 15 when he sells them for $4.70/bushel, he will
have received a total of
A. $4.70/bushel.
B. $5.26/bushel.
C. $5.46/bushel.
D. $5.48/bushel.
E. None of the above
50. If Johnny does not collect his loan deficiency payment on October 15 but
stores his beans until December 15 when he collects his loan deficiency
payment (PCP is $4.69) and sells his beans for $4.70/bushel, he will have
received a total of
A. $4.69/bushel.
B. $4.70/bushel.
C. $5.26/bushel.
D. $5.27/bushel.
E. None of the above
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2002 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.
PROBLEM I - Market Value Balance Sheet
Using the information below, complete the net worth statement for January 1,
2002:
Land . . . . . . . . . . . . . . . . . . . . $750,000
House . . . . . . . . . . . . . . . . . . . 140,000
Machinery and equipment. . . . . . . . . . . 112,000
Cows . . . . . . . . . . . . . . . . . . . . 40,000
Calves . . . . . . . . . . . . . . . . . . . 15,000
Accounts payable . . . . . . . . . . . . . . 7,652
Autos. . . . . . . . . . . . . . . . . . . . 39,400
Sows and boars . . . . . . . . . . . . . . . 22,000
Market hogs . . . . . . . . . . . . . . . . 65,000
Checking and savings . . . . . . . . . . . . 17,761
Soybeans . . . . . . . . . . . . . . . . . . 9,900
Hog buildings . . . . . . . . . . . . . . . 74,000
Feed and hay . . . . . . . . . . . . . . . . 10,150
Accounts receivable. . . . . . . . . . . . . 12,500
Accrued interest owed. . . . . . . . . . . . 23,175
Accrued taxes owed . . . . . . . . . . . . . 7,700
30-year land loan balance is $262,500.
$12,500 plus interest is due March 1 of each year.
5-year tractor loan balance is $14,460.
$4,820 plus interest is due August 31 of each year.
20-year home loan balance is $42,500.
$2,500 plus interest is due each March and September.
Current Assets: Current Liabilities:
__________________________________ ___________________________________
__________________________________ ___________________________________
__________________________________ ___________________________________
__________________________________ ___________________________________
__________________________________ ___________________________________
__________________________________ ___________________________________
__________________________________ ___________________________________
__________________________________ ___________________________________
Total _________________ 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, 2002, was
A. $130,311
B. $152,311
C. $170,311
D. $179,811
E. None of the above
2. The total value of non-current assets was
A. $1,115,400
B. $1,137,400
C. $1,155,400
D. $1,177,400
E. None of the above
3. The total value of current liabilities was
A. $38,527
B. $19,820
C. $58,347
D. $60,847
E. None of the above
4. The total value of non-current liabilities was
A. $259,640
B. $297,140
C. $299,640
D. $319,460
E. None of the above
5. The net worth was
A. $852,224
B. $880,260
C. $1,177,400
D. $1,207,711
E. None of the above
6. The current ratio was
A. 0.30
B. 0.47
C. 2.14
D. 3.37
E. None of the above
7. The debt to equity ratio was
A. 0.377
B. 0.421
C. 0.773
D. 2.374
E. None of the above
PROBLEM II -- Enterprise Budget
Use the following corn budget to answer Questions 8 through 16.
CORN FOR GRAIN, circular sprinkler system, 20" water, custom harvest (combine
& hauling), shallow electric 50' well, 30' lift, 900 gpm
_____________________________________________________________________________
Operating Inputs Units Price Qty. Value Your Value
Corn seed Lbs. 1.40 21.30 $29.82 __________
Nitrogen (N) Lbs. 0.25 215.00 53.75 __________
Phosphate (P2O5) Lbs. 0.11 50.00 5.50 __________
Custom harvest Acre 19.00 1.00 19.00 __________
Custom hauling Bu. 0.05 180.00 9.00 __________
Rent fert. spreader/ac. Acre 2.44 3.00 7.32 __________
Pre-plant insecticide Acre 22.80 1.00 22.80 __________
Post-plant insecticide Acre 21.60 1.00 21.60 __________
Pre-emerge herbicide Acre 17.34 1.00 17.34 __________
Post-emerge herbicide Acre 18.12 1.00 18.12 __________
Annual operating capital Dol. 0.10 70.00 7.00 __________
Machinery labor Hour 6.00 1.96 11.76 __________
Irrigation labor Hour 6.00 0.96 5.76 __________
Mach. fuel, lube, repair Dol. 16.39 __________
Irrig. fuel, lube, repair Dol. 39.00 __________
Total operating costs $284.16 __________
Fixed costs
Machinery: Amount Value
Interest at 10% 145.50 14.55 __________
Depr., taxes, insurance 16.89 __________
Irrigation:
Interest at 10% 234.20 23.42 __________
Depr., taxes, insurance 26.00 __________
Total fixed costs 80.86 __________
Production Units Price Quantity Value
Corn Bu. 2.00 180.00 360.00__________
Total receipts 360.00
Returns above total operating costs 75.84__________
Returns above all specified costs -5.02 __________
______________________________________________________________________________
8. The return above total operating cost per acre is:
A. -$5.02
B. $75.84
C. $284.16
D. $360.00
E. None of the above
9. How many hours of labor are budgeted per acre?
A. 1.96
B. 2.92
C. 12.00
D. 17.52
E. None of the above
10. What is the total budgeted interest cost per acre?
A. $14.55
B. $37.97
C. $44.97
D. $379.70
E. None of the above
11. If a 50-pound bag of seed corn has 75,000 kernels, how many seeds are
being planted per acre?
A. 3,521
B. 21,300
C. 29,820
D. 31,950
E. None of the above
12. What is the total specified fertilization cost per acre? (ignore cost of
labor and operating capital)
A. $53.75
B. $59.25
C. $66.57
D. $74.05
E. None of the above
13. How many bushels of corn are required to cover the specified irrigation
costs per acre?
A. 13.00
B. 22.38
C. 24.71
D. 47.09
E. None of the above
14. What yield will cause returns above all specified costs to equal zero?
A. 142.1 bu.
B. 151.5 bu.
C. 182.5 bu.
D. 186.3 bu.
E. None of the above
15. What will be the per acre returns above all specified costs if one-third
of the crop must be given to the landlord for rent of the land?
A. -$125.02
B. -$80.86
C. -$44.16
D. -$5.02
E. None of the above
16. If one-third of the crop is given as rent, what price received for corn
will make the per acre receipts above all specified costs equal zero?
A. $2.63
B. $2.71
C. $3.02
D. $3.04
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 items.
On May 15, 2001, Dave bought a new tractor. Dave paid $15,000 "down" and
financed the remaining $40,000 over 5 years at 8% interest.
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 Dave does not expense any of the cost of the tractor, then 2001
depreciation will be (use regular MACRS and mid-year convention)
A. $4,285.60
B. $5,892.70
C. $7,366.15
D. $8,250.00
E. None of the above
19. If Dave expenses none of the tractor cost and uses the mid-quarter
convention and regular MACRS, then 2001 depreciation will be
A. $5,357.20
B. $5,892.70
C. $7,366.15
D. $10,312.50
E. None of the above
20. If Dave expenses the maximum allowable on the tractor and uses regular
MACRS and mid-year convention, then 2001 depreciation will be
A. $4,021.76
B. $3,749.90
C. $3,642.76
D. $3,321.34
E. None of the above
21. If Dave expenses the maximum and uses the mid-year convention and
straight line depreciation over the alternate MACRS life, his 2001
depreciation will be
A. $0
B. $500
C. $800
D. $1,550
E. None of the above
22. Under MACRS, a grain bin is classified as
A. 7-year property
B. 10-year property
C. 15-year property
D. 20-year property
E. None of the above
PROBLEM IV -- Supply and Demand
2002 Missouri FFA Farm Management Graph for Exam
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 the market equilibrium price of pork in the U.S.?
A. P1
B. P2
C. P3
D. P4
E. None of the above
24. At the market equilibrium price, how much pork will be imported into the
U.S.?
A. Q1
B. Q2
C. Q3
D. Q4
E. Q5
25. At the market equilibrium price, how much pork will be exported from the
U.S.?
A. Q1
B. Q2
C. Q3
D. Q4
E. Q5
26. At what price would pork imports equal pork exports?
A. P1
B. P2
C. P3
D. P4
E. None of the above
For questions 27 and 28, assume an outbreak of foot and mouth disease in the
U.S. causes an end to U.S. pork exports.
27. The change will cause the market equilibrium price to
A. increase.
B. decrease.
C. not change.
D. None of the above
28. After the FMD outbreak, U.S. pork imports should
A. increase.
B. decrease.
C. stay the same.
D. None of the above
PROBLEM V - Marketing
On March 5, a farmer puts 100 head of steers on feed. He sells them as
slaughter cattle on August 5. Ignore commissions, and interest.
March 5 quotes: August 5 quotes:
August futures price = $69.75 August futures price = $64.50
Expected basis = $1.00 under the board Basis = $0.50 under the board
Strike ---- Premiums ---- ---- Premiums ----
price Call Put Call Put
$64.00 $6.05 $0.55 $1.40 $1.21
$66.00 $4.35 $1.15 $0.50 $2.62
$68.00 $3.10 $1.85 $0.25 $4.50
$70.00 $2.10 $2.75 $0.05 $6.11
$72.00 $1.37 $4.00 $0.02 $7.95
29. What is the cash price of slaughter cattle on August 5?
A. $64.00
B. $64.50
C. $65.00
D. $68.75
E. None of the above
30. If the farmer sold a futures contract on March 5 and bought back the
contract on August 5, what would be the realized price per hundredweight
(cash + net on futures) for these steers?
A. $58.75
B. $64.50
C. $68.25
D. $69.25
E. None of the above
31. If the farmer bought a $68.00 Put on March 5 and sold the Put on August
5, what would be the realized price per hundredweight (cash + net on
options) for his steers?
A. $61.35
B. $62.35
C. $66.65
D. $67.65
E. None of the above
32. If the farmer bought a $68.00 Put and sold a $68.00 Call on March 5, and
sold the Put and bought back the Call on August 5, what would be the
realized price per cwt. (cash + net on options) for his steers?
A. $68.50
B. $64.00
C. $68.25
D. $69.50
E. None of the above
33. Given all the information above, which of the following actions taken on
March 5 turned out to be the most profitable?
A. Selling a futures contract.
B. Buying a $68 Put option.
C. Buying a $68 Put and selling a $68 Call.
D. Taking no market action.
PROBLEM VI - Loan Payments
Loan Amortization: You have a $10,000 loan to be paid back over 7 periods in
equal payments.
Outstanding Payment Payment
Principal Loan Portion Portion
Period before Payment Payment Interest Principal
1 $10,000.00 $1,855.53 A $1,155.53
2 $8,844.47 $1,855.53 $619.11 $1,236.42
3 $7,608.05 $1,855.53 $532.56 B
4 $6,285.08 $1,855.53 $439.95 $1,415.58
5 C $1,855.53 $340.86 $1,514.67
6 $3,354.83 $1,855.53 $234.84 D
7 $1,734.14 $1,855.53 $121.39 $1,734.14
34. The value of A is
A. $700.00
B. $709.22
C. $712.86
D. $720.15
E. None of the above
35. The value for B is
A. $1,294.16
B. $1,307.05
C. $1,322.97
D. $1,326.00
E. None of the above
36. The value for C is
A. $4,851.75
B. $4,869.50
C. $4,894.66
D. $4,907.18
E. None of the above
37. What is the outstanding principal after the seventh payment?
A. -$121.39
B. $0
C. $121.39
D. $1,734.14
E. None of the above
38. What interest rate is used for this loan?
A. 7.00%
B. 7.75%
C. 8.23%
D. 17.74%
E. None of the above
39. At the beginning of last year, a farmer had an outstanding loan for
$217,475. The interest rate was 8% APR. If the farmer made one loan
payment at the end of the year of $35,000, what was the outstanding
balance at the end of the year?
A. $17,398
B. $182,475
C. $199,873
D. $204,228
E. None of the above
40. On April 1, 2001, Anne borrowed $25,000 to plant soybeans. On November
1, 2001, she repaid the $25,000 along with $1,348.96 interest. What
annual interest rate did she pay?
A. 8.50%
B. 9.25%
C. 9.75%
D. 10.50%
E. None of the above
PROBLEM VII - Precision Agriculture
A farmer is looking at employing IMPRECISEAG, a precision ag firm that can
apply fertilizer in 10 lb. increments. The cost of fertilizer is $0.45/lb.
Corn is selling for $2.00 per bushel. He has one field that is a mix of Soils
A and B. The field is 100 acres with 70 acres of Soil A and 30 acres of Soil
B. He has determined that his yields will respond according to the following
table.
Fertilizer Soil A yld.Soil B yld.
lbs./ac. bu./ac. bu./ac.
100 100 120
110 105 128
120 108 134
130 110 138
140 111 141
150 112 143
41. How much fertilizer should he apply per acre if he fertilizes the entire
field based on Soil Type A?
A. 100 lbs.
B. 110 lbs.
C. 120 lbs.
D. 130 lbs.
E. None of the above
42. What are his profit maximizing net returns above fertilizer cost for the
entire field if he fertilizes the entire field based on Soil A?
A. $14,160
B. $17,760
C. $19,180
D. $23,160
E. None of the above
43. How much fertilizer should he apply per acre if he fertilizes the entire
field based on Soil Type B?
A. 100 lbs.
B. 110 lbs.
C. 120 lbs.
D. 130 lbs.
E. None of the above
44. What are his profit maximizing net returns above fertilizer cost for the
entire field if he fertilizes the entire field based on Soil B?
A. $16,980
B. $17,700
C. $18,690
D. $24,000
E. None of the above
45. What are his profit maximizing net returns above fertilizer cost for the
entire field if he fertilizes using the precision ag technique of
applying the profit maximizing amount on each soil type?
A. $14,650
B. $14,825
C. $17,910
D. $20,850
E. None of the above
46. What are his profit maximizing net returns above fertilizer cost for the
entire field if he applies 130 pounds per acre on all 100 acres?
A. $17,830
B. $19,575
C. $21,790
D. $23,680
E. None of the above
PROBLEM VIII - Financial Analysis
Farmer Brown is trying to analyze changes in his net worth from last year to
this year. There were no changes in his beginning and ending accrued
interest, accrued taxes, accounts payable, or inventory of non-capital assets.
He neither received nor made any gifts or inheritances. He has gathered the
following information:
Beginning checking balance $10,000
Ending checking balance $15,000
Gross cash farm operating income $200,000
Farm operating expenses (excluding debt payments) $181,000
Capital sales $50,000
Capital purchases $35,000
Money borrowed $20,000
Principal payments $22,000
Interest paid $17,000
Withdrawals from savings $0
Deposits to savings $5,000
47. What were the total cash inflows (excluding the beginning cash balance)
into the business?
A. $200,000
B. $250,000
C. $270,000
D. $275,000
E. None of the above
48. What were the total cash outflows (excluding the ending cash balance)
from the business?
A. $181,000
B. $220,000
C. $255,000
D. $260,000
E. None of the above
49. His beginning liabilities were $200,000. What are his ending
liabilities?
A. $178,000
B. $196,000
C. $198,000
D. $200,000
E. None of the above
50. If total depreciation for the year was $60,000 and the capital items sold
had a remaining book value of $40,000, then the book value net worth
should have
A. decreased by $15,000.
B. decreased by $53,000.
C. decreased by $55,000.
D. decreased by $57,000.
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.
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2002 STATE FFA FARM MANAGEMENT CONTEST
Key
Multiple Choice
1. C 11. A 21. A 31. B 41. C
2. C 12. C 22. C 32. C 42. A
3. B 13. C 23. B 33. C 43. D
4. B 14. E 24. A 34. B 44. B
5. D 15. B 25. D 35. C 45. B
6. B 16. C 26. B 36. B 46. D
7. C 17. B 27. C 37. C 47. D
8. C 18. B 28. A 38. A 48. B
9. A 19. B 29. C 39. D 49. D
10. A 20. D 30. B 40. B 50. D
Problems
1. A 11. D 21. D 31. C 41. C
2. D 12. C 22. A 32. D 42. B
3. D 13. D 23. C 33. C 43. E
4. B 14. C 24. A 34. A 44. B
5. E 15. A 25. B 35. C 45. C
6. C 16. D 26. D 36. B 46. A
7. A 17. C 27. B 37. B 47. C
8. B 18. B 28. B 38. A 48. D
9. B 19. C 29. A 39. C 49. C
10. C 20. D 30. D 40. B 50. B