2004 Missouri FFA Farm Management Contest - AgEBB

2004 Missouri FFA
Farm Management Contest

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                  2004 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.  There
is only one correct answer to each question.

 1. You must use the mid-quarter convention of depreciation if
    more than what percent of 3-, 5-, 7-, 10-, 15-, and 20-year
    property is acquired in the fourth quarter?
          A.  33%
          B.  40%
          C.  50%
          D.  65%
          E.  None of the above

 2. The maximum annual contribution to an IRA is $3,000 per person for 
    someone under age 50 and ___________ for someone age 50 or older.
          A.  $3,000
          B.  $3,250
          C.  $3,500
          D.  $4,000 
          E.  None of the above

 3. By contributing the maximum amount to a Roth IRA, a 40-year-old 
    farmer will reduce his taxable income by
          A.  $0.
          B.  $2,000.
          C.  $3,000.
          D.  $3,500.
          E.  None of the above

 4. A farmer is liquid if 
          A.  he has sufficient current assets to cover current debts.
          B.  he has sufficient equity to cover current debts.
          C.  he has sufficient assets to cover all debts.
          D.  he can pay all debts with all equity.
          E.  All of the above

 5. You buy seed beans having 2550 seeds per pound.  The directions 
    state to drill at the rate of 3 beans per foot with a 7-inch spaced 
    drill.  How many 50-pound bags will you need for a 35-acre field?  
    (There are 43,560 sq. ft. in an acre.)
          A.  25 bags
          B.  34 1/2 bags
          C.  51 bags
          D.  61 1/2 bags
          E.  None of the above

 6. A cattle buyer purchases 35 head of steers which average
    1,177 pounds for $70.50/cwt.  He trucks them 282 miles to a
    slaughter plant where he sells them on a carcass basis for
    $1.04 per pound.  His trucking and handling costs are $441. 
    What average carcass weight does he need in order to break
    even?
          A.  799 pounds
          B.  810 pounds
          C.  826 pounds
          D.  853 pounds
          E.  None of the above

 7. Herbicide is usually applied to weeds and grasses around the
    farmstead as a 2% solution.  How many ounces of herbicide
    should be added to a 2 1/2 gallon sprayer to make a 2% solution?  
    (One gallon contains 128 oz.)  
          A.  2.0 ounces
          B.  5.0 ounces
          C.  6.4 ounces
          D.  10.3 ounces
          E.  None of the above

 8. As a cattle buyer you buy 50 choice steers weighing 1,210 pounds on 
    average.  If they  yield 62%, how much would the average carcass weigh?
          A.  694.4 pounds
          B.  712.3 pounds
          C.  750.2 pounds
          D.  806.5 pounds
          E.  None of the above

 9. A farmer obtains 4-ton hay yields and 12-ton corn silage yields.  His 
    cash costs of production are $30 per ton of hay and $14 per ton of corn
    silage.  One pound of hay will substitute for 2 pounds of corn silage 
    and not affect rate of gain.  What proportion of hay and silage should 
    this farmer raise for cattle feed?
          A.  Grow 2 acres of corn silage for each acre of hay.
          B.  Grow 3 acres of hay for each acre of corn silage.
          C.  Grow only corn silage.
          D.  Grow only hay.
          E.  Not enough information given.

 10. When budgeting a corn production enterprise, land ownership costs are 
     considered to be
          A.  a variable cost.
          B.  a depreciable cost.
          C.  an operating cost.
          D.  a fixed cost.
          E.  None of the above

 11. Marginal revenue and marginal cost are useful concepts in determining 
     the profit maximizing output level.  Profit will be at its maximum level
          A.  where marginal revenue is at its maximum level and marginal
              cost is 0.
          B.  where marginal revenue is 0 and marginal cost is at its maximum.
          C.  where marginal revenue equals marginal cost.
          D.  where marginal revenue is at its minimum and marginal cost
              is at its maximum.

 12. If both demand and supply increased equally for an agricultural product,
     what will be the results on the quantity of the product sold and the price 
     received?
          A.  The same quantity will be sold at the same price.
          B.  An increased quantity will be sold at a lower price.
          C.  An increased quantity will be sold at a higher price.
          D.  An increased quantity will be sold at the same price.
          E.  None of the above

 13. When a farmer borrows money to purchase land, he usually must offer the 
     title to the property as security until the debt has been repaid.  This 
     credit instrument is commonly referred to as a
          A.  sales contract.
          B.  promissory note.
          C.  mortgage.
          D.  check.
          E.  None of the above

 14. A decline in the value of total farm assets will
          A.  increase the rate of return to equity.
          B.  increase the rate of return to assets.
          C.  increase the capital turnover ratio.
          D.  all of the above.
          E.  None of the above

 15. The increase in wheat yield becomes smaller for each additional 10 
     pounds of nitrogen fertilizer applied after 30 pounds per acre have 
     been applied.  This is an example of
          A.  increasing marginal returns.
          B.  unprofitable use of fertilizer.
          C.  diminishing marginal physical product.
          D.  stage 3 of production.
          E.  None of the above

 16. Which of the following causes a shift in the demand for beef?
          A.  A decrease in cattle numbers
          B.  Increased cost of producing beef
          C.  Increased number of cattle producers
          D.  Increased income of consumers
          E.  All of the above

 17. 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

 18. Current assets minus current liabilities equals
          A.  net worth.
          B.  net working capital.
          C.  net farm income.
          D.  gross income.
          E.  None of the above

 19. If corn silage as fed contains 65% moisture and 2.4% protein, the dry
     matter would be what percent protein?
          A.  2.50
          B.  5.71
          C.  6.86
          D.  7.14
          E.  None of the above

 20. Farmer Brown purchases a new tractor. A record keeping system which
     records both the addition to equipment and the reduction of cash is
     called
          A.  income statement.
          B.  dual effect.
          C.  balance sheet.
          D.  double entry.
          E.  None of the above

 21. 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

 22. A farmer purchases 700-pound feeder steers for $0.85 per pound and
     plans to sell the steers at 1100 pounds.  The farmer estimates the
     total cost of gain to be $0.53 per pound.  The nearest breakeven
     price when the steers are sold at 1100 pounds is
          A.  $0.607/pound.
          B.  $0.705/pound.
          C.  $0.734/pound.
          D.  $0.767/pound.
          E.  None of the above

 23. 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 the lender devalues the land by 15%?
          A.  .64
          B.  .88
          C.  1.14
          D.  1.22
          E.  None of the above

 24. How many total acres are included in "SW 1/4 of NE 1/4 and S 1/2 of
     NW 1/4 of Section 15, Twp. 10 N, R 4W of the 5th Principle Meridian"?
          A.  80 acres
          B.  120 acres
          C.  160 acres
          D.  320 acres
          E.  None of the above

 25. How much perimeter fence would be required to completely enclose the
     parcel of land described in the question above?
          A.  1.0 mile
          B.  1.5 miles
          C.  2.0 miles
          D.  2.5 miles
          E.  None of the above

 26. The role of price in a free market is to serve as a guide
          A.  in controlling quantity supplied.
          B.  in limiting quantity demanded.
          C.  in allocating consumption.
          D.  in deciding what, when, and how much to produce.
          E.  All of the above

 27. A farmer is solvent if
          A.   he has sufficient current assets to cover current debts.
          B.  he has sufficient equity to cover debts.
          C.  he has sufficient assets to cover all debts.
          D.  he can pay all debts with all equity.
          E.  All of the above

 28. A Subchapter S corporation can have no more than
          A.  10 shareholders.
          B.  15 shareholders.
          C.  35 shareholders.
          D.  75 shareholders.
          E.  There is no limit on number of shareholders.

 29. Corn has an expected yield of 120 bushels per acre and has a
     production cost of $140.00 per acre.  Expected market prices are
     $3.00 per bushel for corn and $9.00 per bushel for soybeans. 
     Soybeans can be raised at a production cost of $110 per acre.  At
     what break-even yield per acre would soybeans generate the same net
     return per acre as dryland corn?
          A.  31.9 bushels
          B.  35.2 bushels
          C.  36.7 bushels
          D.  42.0 bushels
          E.  None of the above

 30. Purchase of a call option on corn means the buyer
          A.  is required to sell a corn futures contract at a set price.
          B.  may sell, but is not required to sell, a corn futures
              contract at a set price.
          C.  may buy, but is not required to buy, a corn futures contract
              at a set price.
          D.  is required to buy a corn futures contract at a set price.
          E.  None of the above

 31. A soybean producer decides to store his soybeans in the local
     elevator for 4 months.  The price at harvest is $6.00 per bushel and
     the elevator charges 2 cents per bushel per month for storage plus a
     5 cent per bushel handling charge.  He has 4,000 bushels to sell and
     must borrow $24,000 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.  $6.13
          B.  $6.21
          C.  $6.24 
          D.  $6.29
          E.  None of the above

 32. How many pounds of 48% protein supplement must be mixed with 8%
     protein corn to make a ton of 16% protein feed?
          A.  300 pounds
          B.  400 pounds
          C.  550 pounds
          D.  600 pounds
          E.  None of the above

 33. The capital gains taxes that would be due should a farmer sell his
     land is an example of a
          A.  current liability.
          B.  long-term liability.
          C.  deductible expense.
          D.  contingent liability.
          E.  None of the above

 34. A firm should shut down in the short-run if it cannot cover its
          A.  fixed costs.
          B.  total costs.
          C.  variable costs.
          D.  time costs.
          E.  overhead costs.

 35. A feedlot operator buys feeder steers, finishes them, and sells them. 
     The operator estimates that finished steers will sell for $75 per
     cwt. and that it will cost $170 per head to bring them from the 750
     pound purchase weight to the 1100 pound selling weight.  What is the
     highest price the operator can pay for 750 pound feeder steers to
     break even?
          A.  $70.25/cwt.
          B.  $76.14/cwt.
          C.  $80.00/cwt.
          D.  $87.33/cwt.
          E.  None of the above

 36. A part-time farmer has 160 acres of land, 40 cows and can only work
     400 hours per year on his farm. An acre of corn requires 3 hours of
     labor and yields 80 bushels. An acre of beans take 2 hours and yields
     30 bushels.  Each cow needs 8 hours of labor, 3 acres of land, and
     consumes 16 bushels of corn.  What is the maximum number of acres of
     soybeans he can grow if the farmer keeps 40 cows and does not buy any
     corn?
          A.  28
          B.  32
          C.  64
          D.  94
          E.  None of the above 

 37. A vicious cold spell in the late spring has wiped out the buds on the
     peach trees grown in Georgia, a major peach producing state.  How
     will this freeze impact the price received for peaches by Maryland
     peach producers?
          A.  No effect -- Georgia is too far away to have any impact on
              Maryland.
          B.  Will lower the price because the demand for peaches will be
              lower.
          C.  Because of the reduced supply, prices for peaches in
              Maryland will tend to move upward.
          D.  No effect -- Maryland does not grow enough peaches to have
              any impact on prices.
          E.  None of the above

 38. During the year, a farmer pays $1,800 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 30%. 
     What is his after-tax cash cost of using the tractor for the year?
          A.  $  750
          B.  $1,900
          C.  $2,050
          D.  $3,600
          E.  None of the above

 39. A written agreement by which an owner of property transfers title to
       someone for the benefit of beneficiaries is a
          A.  trust.
          B.  partnership.
          C.  corporation.
          D.  sole proprietorship.
          E.  None of the above

 40. A producer sells 9 feeder steers for $78/cwt.  The average weight per
     steer is 700 pounds.  There is a 2.5% sales commission and yardage
     fees of $2.30 per head.  The net amount received for the pen of
     steers would be
          A.  $4,256.20
          B.  $4,240.80
          C.  $4,618.00
          D.  $4,770.45
          E.  None of the above

 41. The price of widgets changes from $100 to $90 and, as a result, the
     quantity demanded increases from 50 to 60 units.  From this we can
     conclude that
          A.  the demand for widgets is elastic.
          B.  the demand for widgets is inelastic.
          C.  the demand for widgets is of unit elasticity.
          D.  the demand for widgets has declined.
          E.  None of the above

 42. In analysis of a farm, what would you do if a cash flow projection
     indicated that there would be more expense than income in a certain
     month?
          A.  Terminate the enterprise causing the cash flow problem that
              month.
          B.  Use savings, delay expenses, move up sales, or borrow money.
          C.  Change from cash to accrual accounting method.
          D.  Change depreciation methods.
          E.  None of the above

 43. 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.

 44. If the price of a September Put option is higher today than
     yesterday, then one would expect that the price of a September
     futures contract is
          A.  higher today than yesterday.
          B.  lower today than yesterday.
          C.  unchanged from yesterday.
          D.  either up or down.  There is no relationship between futures prices and
              prices of options
          E.  None of the above

 45. Which of the following would not appear on a cash flow statement?
          A.  Interest paid on a loan for a tractor
          B.  Principal paid on a loan for a tractor
          C.  Depreciation expense on a tractor
          D.  Rental payment received from the neighbor who used the tractor.
          E.  None of the above

 46. Frank expects his wheat to yield 40 bushels per acre and sell for
     $4.00 per bushel.  He has spent $75 per acre on seed, fertilizer,
     fuel, and chemicals so far as of January 1.  It will cost $10 per
     acre to harvest and deliver the wheat to market.  Right now he could
     only get $3.00 per bushel for the wheat.  His balance sheet asset
     entry should reflect 
          A.  the $75 per acre he has spent so far.
          B.  the $160 per acre he expects to receive when sold.
          C.  $120 based on today's price.
          D.  the $160 per acre minus the $75 spent so far and minus the
              $10 per acre to harvest the wheat.
          E.  None of the above

 47. An increase in total operating costs of $20 per acre will increase
     the break-even price of the crop by how much if the yield is 100
     units per acre?
          A.  $0.02 per unit
          B.  $0.20 per unit
          C.  $2.00 per unit
          D.  $20.00 per unit
          E.  None of the above

 48. How many bushels of corn are in a metric tonne?
          A.  33.3
          B.  35.7 
          C.  36.7
          D.  39.4
          E.  None of the above

 49. The maximum amount that can be claimed as a Section 179 expense deduction 
     on your 2003 tax return is
          A.  $17,500.
          B.  $20,000.
          C.  $24,000.
          D.  $100,000.
          E.  None of the above

 50. Liability of a limited partner in a limited partnership is limited to
          A.  all debts and obligations of the partnership up to the amount of his
              investment in the partnership.
          B.  a maximum of 50% of obligations of the partnership.
          C.  all debts and obligations of the partnership.
          D.  all debts and obligations of the partnership up to double the amount 
              of his share of the assets in the partnership.
          E.  None of the above

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                  2004 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 1,2004:
            Land. . . . . . . . . . . . . . . . . . . .   $750,000
            House  . . . . . . . . . . . . . . . . . .     140,000
            Machinery and equipment. . . . . . . . . ..    112,000
            Cows . . . . . . . . . . . . . . . . . .. .     40,000
            Calves . . . . . . . . . . . . . . . .  . .     37,000
            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 combine loan balance is $29,250.
            $9,750 plus interest is due August 31 of each year.
            20-year home loan balance is $59,500.
            $3,500 plus interest is due each 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, 2004, 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.  $19,820
          B.  $58,347
          C.  $60,847
          D.  $64,277
          E.  None of the above

 4. The total value of non-current liabilities was
          A.  $325,500
          B.  $338,000
          C.  $351,250
          D.  $354,750
          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.  0.42 
          C.  2.14 
          D.  2.37 
          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 0.4?
          A.  $375,973.60
          B.  $470,960.00
          C.  $531,884.40
          D.  $2,144,835.00
          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  200.00    50.00     __________
  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                         $280.41     __________

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   Qty.  Value
  Corn   Bu.                  2.00    180.00        360.00     __________
     Total receipts                                 360.00     __________
 
Returns above total operating costs                    79.59   __________
Returns above all specified costs                      -1.27   __________
______________________________________________________________________________

 8. The return above total operating cost per acre is:
          A.  -$1.27
          B.  $79.59 
          C.  $280.41
          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 74,000 kernels, how many seeds are
     being planted per acre?  
          A.  21,300
          B.  29,820
          C.  31,524
          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.  $50.00 
          B.  $55.50   
          C.  $62.82   
          D.  $250.00   
          E.  None of the above

 13. How many bushels of corn are required to cover the specified
     irrigation costs per acre?
          A.  22.38
          B.  24.71
          C.  47.09
          D.  94.18
          E.  None of the above

 14. What yield will cause returns above all specified costs to equal zero?
          A.  175.1 bu.
          B.  180.6 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.  -$121.27
          B.  -$101.27
          C.  -$80.86
          D.  -$41.68  
          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.  $3.01
          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 item.

On March 15, 2003, Bill traded tractors.  The old tractor had market value of
$15,000 and a zero remaining undepreciated book value.  Bill paid $40,000
"boot" in the trade for the new tractor.  

 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 Bill does not expense any of the cost of the tractor and does not
     claim the special 30% first year allowance, what will 2003
     depreciation be?  (use regular MACRS and mid-year convention)
          A.  $2,400.36
          B.  $4,285.60
          C.  $5,892.70
          D.  $6,428.40
          E.  None of the above

 19. If Bill expenses $20,000 on the tractor trade and claims the special
     30% first year allowance and uses the mid-quarter convention and
     regular MACRS, the 1/1/04 remaining book value of the new tractor
     will be
          A.  $11,375.00
          B.  $12,932.46
          C.  $19,906.25
          D.  $22,750.00
          E.  None of the above

 20. If Bill does not expense or claim the 30% special first year allowance  
     and uses the mid-year convention and straight line depreciation over the
     alternate MACRS life, his 2003 depreciation will be which of the following:
          A.  $2,000
          B.  $2,600
          C.  $2,750
          D.  $4,000
          E.  None of the above
  
 21. If Bill uses regular MACRS, then the first year the tractor will appear
     on Bill's January balance sheet with a zero book value will be in
          A.  2008.
          B.  2009.
          C.  2010.
          D.  2011.
          E.  None of the above

 22. Under MACRS, a farm fence 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

2004 Missouri FFA Farm Management Graph for Exam
                                     

The above graph represents the supply of soybeans (S), the demand for soybeans
in the U.S. (DUS), the demand for soybeans for export (DF), and the total
demand of for soybeans (DT).        

 23. What is the market equilibrium price of soybeans 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 soybeans will be used in
       the U.S.?
          A.  Q1
          B.  Q2
          C.  Q3
          D.  Q4
          E.  Q5

 25. At the market equilibrium price, how much soybeans will be exported?
          A.  Q1
          B.  Q2
          C.  Q3
          D.  Q4
          E.  Q5

 26. Without foreign demand, the equilibrium price of soybeans would be
          A.  P1
          B.  P2
          C.  P3
          D.  P4
          E.  P5

For Questions 27 and 28, include foreign demand and assume imports from Brazil
cause the supply to increase from S to S1

 27. The increased supply of soybeans should cause soybean demand to
          A.  shift to the left and up.
          B.  shift to the right and down.
          C.  not change.
          D.  None of the above
    
 28. Soybeans imports would cause
          A.  exports of soybeans to go up.
          B.  the equilibrium price of soybeans to go down.
          C.  Both of the above
          D.  the foreign demand for soybeans to shift left.
          E.  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:                         January 15 quotes:
March futures price = $3.70             March futures price = $3.50
Expected basis = $0.10 under the board  Basis = $0.05 under the board

         Strike       ---- Premiums ----        ---- Premiums ----
         price         Call       Put             Call        Put
         $3.10        $0.73      $0.01           $0.58       $0.01
         $3.20        $0.63      $0.02           $0.48       $0.02
         $3.30        $0.53      $0.03           $0.38       $0.04
         $3.40        $0.43      $0.08           $0.28       $0.11
         $3.50        $0.33      $0.15           $0.19       $0.19
         $3.60        $0.24      $0.24           $0.12       $0.29

 29. What is the cash price of wheat on January 15?
          A.  $3.40
          B.  $3.45
          C.  $3.50
          D.  $3.60
          E.  None of the above

 30. If the farmer sold two 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.  $3.25
          B.  $3.40
          C.  $3.65
          D.  $3.85
          E.  None of the above

 31. If the farmer bought two $3.40 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.  $3.37
          B.  $3.43
          C.  $3.48
          D.  $3.51
          E.  None of the above

 32. If the farmer bought two $3.40 Puts and sold two $3.40 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.  $3.46 
          B.  $3.58 
          C.  $3.63
          D.  $3.81 
          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 $3.40 Put options.
          C.  Buying two $3.40 Puts and selling two $3.40 Calls.
          D.  Selling the wheat on July 10.
          E.  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 C is
         A.  $4,851.75
         B.  $4,869.50
         C.  $4,894.66
         D.  $4,907.18
         E.  None of the above

 36. 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

 37. 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

 38. Using the table on the previous page, what is the present
     value of an annuity of $1,855.53 for 5 years?
         A. $6,285.08
         B. $7,608.05
         C. $8,112.14
         D. $9,277.65
         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 $45,000, what was the outstanding
     balance at the end of the year?
         A.  $17,398
         B.  $189,873
         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 $1,239.58
     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 - Diminishing Returns

A farmer is looking at a precision ag firm that can apply fertilizer in 10 lb.
increments.  The cost of fertilizer is $0.45/lb.  Corn is selling for $2.50
per bushel.  He has one field that is a mix of Soils A and B.  The field is
100 acres with 40 acres of Soil A and 60 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.  

                      120            100            120
                      130            105            128            
                      140            108            134            
                      150            110            138            
                      160            111            141            
                      170            112            143            

 41. 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

 42. What are his 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.  $24,950
          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.  140 lbs.
          B.  150 lbs.
          C.  160 lbs.
          D.  170 lbs.
          E.  None of the above

 44. What are his 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.  $25,000
          E.  None of the above

 45. What are his net returns above fertilizer cost for the entire field
     if he fertilizes by applying the profit maximizing amount on each
     soil type?
          A.  $25,025
          B.  $25,060
          C.  $25,100
          D.  $25,160
          E.  None of the above

 46. What are his net returns above fertilizer cost for the entire field
     if he applies 160 pounds per acre on all 100 acres?
          A.  $24,550 
          B.  $24,875
          C.  $25,050
          D.  $25,125
          E.  None of the above

                     PROBLEM VIII - Partial Budgeting

Frank Frogfarmer is having financial problems with his farm being able to
provide the level of net income desired.  He is considering switching a cow-
calf enterprise to a yearling enterprise.  Having successfully completed four
years of Agricultural Education in Snake Navel High School, this enterprising
young rancher decided to use a partial budget technique to determine if the
change should be made.

He estimated he would have a 2% death loss which would allow him to sell 196
head of yearlings weighing 750 pounds each at $87 per hundredweight.  Total
labor associated with the yearling enterprise is $3,200.  He estimated feeder
calves would cost $505/head and consume $1,800 of supplemental feed.  Interest
charge on the investment associated with the yearling enterprise is $3,800. 
He must purchase a $5,500 piece of new equipment for the yearling enterprise
(figure annual charges at 10% of purchase price).

Mr. Frogfarmer determined annual costs for the cow-calf enterprise to be:  
(a) feed -- $3,600; (b) a replacement bull  at $1,200/year; (c) labor --
$5,400; and (d) interest on cow herd investment -- $7,000.  In addition to a
reduction in the previous listed costs associated with the cow-calf herd,
receipts would be reduced by $34,220 per year.

Use the space below to determine if the change in enterprises should be made.

Additional Receipts:                                   
  Sale of yearlings                                        47. $___________

Reduced Costs:
  Labor            $____________
  Feed              ____________
  Replacement bulls              ____________
  Interest                       ____________
    Subtotal                                 48. $____________

Total of additional receipts and reduced costs                 $____________

Additional Costs:
  Labor            $____________
  Feed              ____________
  Cattle purchases               ____________
  Equipment charges              ____________
  Interest                       ____________
    Subtotal                                 49. $____________

Reduced Receipts:
  Calves, cows, bulls                            $____________

Total additional costs and reduced receipts                    $____________

Net change in income                                        50. $____________
-----------------------------------------------------------------------------

 47. If Frank Frogfarmer makes the change to backgrounding feeder calves,
     his additional receipts will be:
         A.  $79,000
         B.  $101,000
         C.  $127,890
         D.  $140,000
         E.  None of the above

 48. Frank's reduced costs will be:
         A.  $10,200
         B.  $17,200
         C.  $18,400
         D.  $25,400
         E.  None of the above

 49. The additional costs associated with this change are
         A.  $108,330
         B.  $110,350
         C.  $122,436
         D.  $142,360
         E.  None of the above

 50. Net change in income will be
         A.  a gain of more than $1,000.
         B.  a gain of less than $1,000.
         C.  a loss of more than $1,000.
         D.  a loss of less than $1,000.
         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.

-----------------------------------------------------------------------

              2004 STATE FFA FARM MANAGEMENT CONTEST

                               Key

Multiple Choice
     1.  B        11.  C       21.  D       31.  D       41.  A
     2.  C        12.  D       22.  C       32.  B       42.  B
     3.  A        13.  C       23.  D       33.  D       43.  C
     4.  A        14.  D       24.  B       34.  C       44.  B
     5.  D        15.  C       25.  C       35.  D       45.  C
     6.  B        16.  D       26.  E       36.  A       46.  A
     7.  C        17.  B       27.  C       37.  C       47.  B
     8.  C        18.  B       28.  D       38.  B       48.  D
     9.  C        19.  C       29.  C       39.  A       49.  D
    10.  D        20.  D       30.  C       40.  D       50.  A

Problems
     1.  B        11.  C       21.  D       31.  C       41.  C
     2.  D        12.  C       22.  A       32.  C       42.  D
     3.  D        13.  C       23.  D       33.  A       43.  D
     4.  A        14.  B       24.  B       34.  A       44.  D
     5.  E        15.  A       25.  A       35.  B       45.  D
     6.  D        16.  C       26.  B       36.  B       46.  C
     7.  C        17.  C       27.  C       37.  A       47.  C
     8.  B        18.  B       28.  C       38.  B       48.  B
     9.  B        19.  A       29.  B       39.  B       49.  B
    10.  C        20.  A       30.  C       40.  A       50.  B

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