2007 Missouri FFA
Farm Management Contest
2007 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. Answers
have been rounded.
1. Corn has an expected yield of 140 bushels per acre and a
production cost of $225.00 per acre. Expected market prices are
$3.50 per bushel for corn and $7.00 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 corn?
A. 42.3 bushels
B. 48.6 bushels
C. 53.6 bushels
D. 57.9 bushels
E. None of the above
2. A farmer sold his 5000-bushel corn crop at several different times
during the year. He sold 1000 bushels at $2.00, 2000 bushels at
$3.00, and 2000 bushels at $4.00. What was his average price per
bushel?
A. $2.00
B. $2.67
C. $3.00
D. $3.20
E. None of the above
3. The self-employment tax rate for Medicare is
A. 1.45%
B. 2.90%
C. 5.30%
D. 7.65%
E. None of the above
4. A farmer purchases 800-pound feeder steers for $0.95 per pound and
plans to sell the steers at 1200 pounds. The farmer estimates the
total cost of gain to be $0.80 per pound. The nearest breakeven
price when the steers are sold at 1200 pounds is
A. $0.80 per pound
B. $0.87 per pound
C. $0.90 per pound
D. $0.92 per pound
E. None of the above
5. How many total acres are included in the "S 1/2 of the NE 1/4 and
SE 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
6. 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
7. The Kansas City Board of Trade wheat futures contract is for
A. hard red winter wheat.
B. hard red spring wheat.
C. soft red winter wheat.
D. durum wheat.
E. None of the above
8. The total tax deduction for conservation expenses in any tax year
is limited to ____% of your gross income from farming for the
year.
A. 25%
B. 50%
C. 75%
D. 100%
E. None of the above
9. Farmer Jones has less current assets than current liabilities.
Her current ratio is
A. negative.
B. zero.
C. between 0 and 1.
D. greater than 1.
E. None of the above
10. Economists use elasticities to relate the percentage change in one
variable to the percentage change in another variable. The cross-
price elasticity of demand estimates the impact on the demand
for a good with respect to the change in the price of another
good. A positive cross-price elasticity indicates the two goods
are
A. substitutes.
B. complements.
C. inferior.
D. luxuries.
E. None of the above
11. The own-price elasticity of supply estimates the impact on the
quantity of a good supplied by a change in the price of the good.
Normally, one would expect the own-price elasticity of supply to
be
A. positive.
B. negative.
C. zero.
D. None of the above
12. The income elasticity of demand estimates the impact of a change
in income on the demand for a good. For normal goods, the income
elasticity of demand is
A. positive.
B. negative.
C. zero.
D. None of the above
13. A soybean producer decides to store his soybeans in the local
elevator for 4 months. The price at harvest is $6.40 per bushel
and the elevator charges 2 cents per bushel per month for storage
plus a 5-cent per bushel handling charge. He has 5,000 bushels to
sell and must borrow $32,000 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. $6.53
B. $6.64
C. $6.70
D. $7.04
E. None of the above
14. 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
15. 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
16. 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
17. A procedure for expressing future cash flows in today's dollars is
called
A. compounding.
B. discounting.
C. deflating.
D. inflating.
E. None of the above
18. Farmer Brown has a debt-to-asset ratio of 53%. His debt-to-equity
ratio must be
A. negative.
B. 47%.
C. Less than 100%.
D. Greater than 100%.
E. None of the above
19. The "rule of 72" says to divide 72 by the annual interest rate to
estimate the number of years needed for an initial investment
earning that rate to double. How long would it take for $1
earning 6% a year to grow to $4?
A. 12 years
B. 24 years
C. 36 years
D. 48 years
E. None of the above
20. GPS coordinates are usually given in latitude and longitude. One
second of latitude is about 30 meters, and there are 60 seconds in
a minute of latitude. Using 3.28 feet per meter, the latitude of
a point 1 mile north of your current position would be
A. 54 degrees greater.
B. 54 minutes greater.
C. 54 seconds greater.
D. 54 minutes less.
E. None of the above
21. How many pounds of 48% protein soybean meal must be mixed with 9%
protein corn to make a ton of 15% protein feed?
A. 308 pounds
B. 346 pounds
C. 390 pounds
D. 439 pounds
E. None of the above
22. For an amortized loan, the present value of the loan payments
discounted at the loan's interest rate is equal to
A. the amount of money borrowed.
B. the number of payments times the payment amount.
C. total interest paid over the life of the loan.
D. the size of the annual payment.
E. None of the above
The law of diminishing marginal physical product indicates that as
additional units of an input are used, the subsequent increase in
output decreases. Marginal analysis is used to determine the point of
profit maximization which is where the value of the marginal product
is equal to the marginal factor cost.
23. If the per unit price of output is constant at $2.00 per unit and
the cost of the input is constant at $0.50, then the marginal
physical product of the last unit of input at the point of profit
maximization will be
A. zero units.
B. 0.25 units.
C. 2 units.
D. 4 units.
E. None of the above
24. If the per unit price of output and input in the previous question
both double, then the marginal physical product of the last unit
of input at the point of profit maximization will be
A. zero units.
B. 0.25 units
C. 2 units.
D. 4 units.
E. None of the above
25. If only the per unit price of output increases, the marginal
physical product of the last unit of input at the point of profit
maximization will
A. decrease.
B. remain constant.
C. increase.
D. None of the above
26. If only the per unit price of output increases, then the amount of
the input used at the point of profit maximization will
A. decrease.
B. remain constant.
C. increase.
D. None of the above
27. Farmer Johnson has a rate of return on assets of 9% when assets
are valued using the cost method, and a rate of return on assets
of 5% when the assets are valued using market valuation. This
means that the value of assets using the cost method
A. is greater than the market valuation.
B. is equal to the market valuation.
C. is less than the market valuation.
D. produces a lower return to farm assets.
E. None of the above
28. A farm business has a debt/worth ratio of 1:2. Its current
liabilities total $30,000 and its non-current liabilities total
$90,000. What is the value of its assets?
A. $420,000
B. $360,000
C. $240,000
D. $120,000
E. None of the above
29. A cattle feeding operation has sales of $730,000, feed purchases
of $300,000, other costs of $400,000, an opening inventory of
$380,000, and a closing inventory of $400,000. What is the net
farm income for this operation on an accrual basis?
A. $10,000
B. $30,000
C. $50,000
D. $730,000
E. None of the above
30. If corn silage as fed contains 70% moisture and 2.2% protein, the
dry matter would be what percent protein?
A. 2.80
B. 3.08
C. 6.57
D. 7.33
E. None of the above
31. On March 1, 2006, Kate borrowed $25,000 to plant corn. On
November 1, 2006, she repaid the $25,000 along with $1,734.37
interest. What annual interest rate did she pay?
A. 8.50%
B. 9.25%
C. 9.75%
D. 10.41%
E. None of the above
32. To consider the time value of money in analyzing alternative farm
investments, one should choose the investment with the
A. highest net present value.
B. largest net cash flow over the lifetime of the investment.
C. highest average profits over the investment lifetime.
D. lowest cost.
E. None of the above
33. A $50,000 loan amortized at 8% interest for 20 years yields annual
payments of $5,092.61. How much of the first year's payment is
principal?
A. $1,092.61
B. $1,700.00
C. $2,592.61
D. $4,000.00
E. None of the above
34. For the above loan of $50,000, if the 20th and final payment
includes $377.23 of interest, what was the outstanding principal
balance after the 19th payment?
A. $5,688.07
B. $4,715.38
C. $4,622.77
D. $377.23
E. None of the above
35. For the above loan of $50,000, how much total interest is paid
over the life of the loan?
A. $101,852.20
B. $51,852.20
C. $43,000.00
D. $7,544.60
E. None of the above
36. At the beginning of last year, a farmer had an outstanding loan
for $125,000. The interest rate was 9% APR. If the farmer made
one loan payment at the end of the year of $20,500, what was the
outstanding balance at the end of the year?
A. $104,500
B. $113,750
C. $115,750
D. $120,500
E. None of the above
37. A feedlot operator purchases a pen of 60 feeder steers with an
average weight of 703 pounds and sells them at an average weight
of 1081 pounds. Total feed cost for the pen is $16,634. Feed
cost per pound of gain is equal to
A. $0.440
B. $0.515
C. $0.649
D. $0.733
E. None of the above
38. A producer sells 12 feeder steers for $108/cwt. The average
weight per steer is 750 pounds. There is a 3% sales commission
and yardage fees of $2.10 per head. The net amount received for
the pen of steers would be
A. $9,027.60
B. $9,028.36
C. $9,403.20
D. $9,958.80
E. None of the above
39. You can claim a tax deduction for a charitable contribution of
$________ or more only if you have a written acknowledgment from
the charitable organization.
A. $100
B. $250
C. $1,000
D. $5,000
E. None of the above
40. Total interest to be paid over the life of an amortized loan
equals
A. number of payments times size of payment.
B. number of payments times size of payment minus amount
borrowed.
C. amount of money borrowed times interest rate.
D. amount of money borrowed times interest rate times number
of payments.
E. None of the above
41. How many gallons of water must be mixed with a quart of herbicide
to make a 2% solution?
A. 12.25
B. 12.50
C. 24.75
D. 98.00
E. None of the above
42. 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
43. A hectare equals
A. 0.40 acres
B. 1.74 acres
C. 2.47 acres
D. 5.05 acres
E. None of the above
44. The CME live cattle futures contract is for ______ pounds of fed
cattle.
A. 10,000
B. 40,000
C. 50,000
D. 100,000
E. None of the above
45. In legal terminology, an agent has one's
A. right of ownership of property.
B. authority to transact business.
C. complete control and liability.
D. no financial responsibility.
E. None of the above
46. On a dry matter basis, corn is roughly 69% starch and 8.7% crude
protein. A dry mill ethanol plant converts all the starch in corn
to ethanol while leaving the protein unchanged in the byproduct,
dried distillers grain. Mathematically, what percent crude
protein would you expect in this byproduct?
A. 8.7%
B. 17.4%
C. 20.6%
D. 28.1%
E. None of the above
47. If dried distillers grain has 10% moisture and sells for $140 per
ton, what would be the nutrient equivalent price for wet
distillers grain which has 70% moisture?
A. $42.00 per ton
B. $46.67 per ton
C. $55.56 per ton
D. $108.89 per ton
E. None of the above
Farmer Douglas will buy 800 pound steers in late October. He will
have to pay $100 per hundredweight for the 800 pound steers. The
expected annual price for 1150 pound steers is $85 per cwt. However,
there is normally seasonal variation in fed cattle prices. The
monthly price indexes for slaughter steers are:
Index Index
January 102 July 96
February 103 August 97
March 104 September 98
April 103 October 99
May 100 November 101
June 97 December 100
48. What price for 1150 pound steers can Mr. Douglas expect for a
February selling date?
A. $82.82 per cwt.
B. $85.00 per cwt.
C. $87.55 per cwt.
D. $88.00 per cwt.
E. None of the above
49. What price can Mr. Douglas expect for a March selling date?
A. $82.80 per cwt.
B. $85.00 per cwt.
C. $87.25 per cwt.
D. $88.40 per cwt.
E. None of the above
50. Assuming a March selling date and all costs (excluding purchase of
the feeder steers) total $200 per head, Mr. Douglas can expect a
profit of
A. less than $0 (he would lose money).
B. $0 - $49.99 per head.
C. $50 - $99.99 per head.
D. $100 - $149 per head.
E. over $150 per head.
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2007 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, 2007:
Land . . . . . . . . . . . . . . . . . . . . . . . . $470,000
House . . . . . . . . . . . . . . . . . . . . . . . 110,000
Machinery and equipment. . . . . . . . . . . . . . . 85,000
Cows . . . . . . . . . . . . . . . . . . . . . . . . 34,000
Calves . . . . . . . . . . . . . . . . . . . . . . . 12,000
Accounts payable . . . . . . . . . . . . . . . . . . 5,100
Autos. . . . . . . . . . . . . . . . . . . . . . . . 23,000
Sows and boars . . . . . . . . . . . . . . . . . . . 17,000
Market hogs . . . . . . . . . . . . . . . . . . . . 18,000
Checking and savings . . . . . . . . . . . . . . . . 6,090
Corn . . . . . . . . . . . . . . . . . . . . . . . . 9,000
Hog buildings . . . . . . . . . . . . . . . . . . . 40,000
Feed and hay . . . . . . . . . . . . . . . . . . . . 4,000
Accounts receivable. . . . . . . . . . . . . . . . . 500
Accrued interest owed. . . . . . . . . . . . . . . . 14,740
Accrued taxes owed . . . . . . . . . . . . . . . . . 5,500
30-year land loan balance is $188,000.
$8,950 plus interest is due March 1 of each year.
7-year tractor loan balance is $8,912.
$2,971 plus interest is due November 30 of each year.
15-year home loan balance is $52,800.
$400 plus interest is due each month.
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, 2007, was
A. $49,590
B. $67,590
C. $83,590
D. $88,260
E. None of the above
2. The total value of non-current assets was
A. $728,000
B. $779,000
C. $797,000
D. $831,000
E. None of the above
3. The total value of current liabilities was
A. $25,340
B. $37,661
C. $42,061
D. $52,550
E. None of the above
4. The total value of non-current liabilities was
A. $232,991
B. $237,391
C. $240,172
D. $249,712
E. None of the above
5. The net worth was
A. $502,480
B. $519,780
C. $775,938
D. $828,590
E. None of the above
6. The debt-to-equity ratio was
A. 0.50
B. 0.85
C. 1.18
D. 1.96
E. None of the above
7. The net working capital was
A. $7,529
B. $11,929
C. $49,590
D. $553,538
E. None of the above
PROBLEM II -- Enterprise Budget
Use the following hog budget to answer Questions 8 through 16.
200 Sow Confinement System, Farrow to Finish
complete feed mill
----------Per Sow Per Year----------
____________________________________________________________________________
Operating Inputs Unit Price Qty. Value
Starter ration Cwt. 18.00 11.00 198.00
Corn Cwt. 7.00 125.00 875.00
44-48% protein suppl. Cwt. 12.00 22.00 264.00
Base mix Cwt. 35.00 4.00 140.00
Young boar Head 800.00 0.025 20.00
Utilities Head 4.20 20.00 84.00
Trucking Head 1.75 20.00 35.00
Vet & medicine Head 3.40 20.00 68.00
Young sows Head 180.00 0.50 90.00
Interest on oper. costs Dol. 0.08 991.55 79.32
Labor Hour 10.00 20.00 200.00
Bldg. repair Dol. 85.00
Equip. fuel, lube, repair Dol. 22.00
Total operating costs $2160.32
Fixed costs Qty. Value
Building: Interest at 8% 995.75 $ 79.66
Depr, taxes, insurance 95.50
Equipment: Interest at 8% 472.75 37.82
Depr, taxes, insurance 51.00
Livestock: Interest at 8% 175.00 14.00
Total fixed costs $277.98
Production Unit Price Qty. Value
Slaughter hogs Cwt. 45.00 50.70 $2281.50
Non-breeder gilts Cwt. 41.00 0.32 13.12
Sows Cwt. 36.00 2.10 75.60
Boars Cwt. 25.00 0.13 3.25
Total Receipts $2373.47
Returns above total operating costs $213.15
Returns above all specified costs - 64.83
____________________________________________________________________________
8. The return above total operating cost per sow is:
A. $213.15
B. $1,882.34
C. $2,160.32
D. $2,438.30
E. None of the above
9. How many hours of labor are budgeted per sow?
A. 10
B. 20
C. 50
D. 200
E. None of the above
10. What is the total budgeted interest cost per sow?
A. $79.66
B. $131.48
C. $196.80
D. $210.80
E. None of the above
11. What price per bushel is paid for corn?
A. $3.50
B. $3.92
C. $4.18
D. $7.00
E. None of the above
12. What are the annual feed costs per sow? (ignore cost of operating
capital)
A. $72.00
B. $162.00
C. $1,337.00
D. $1,477.00
E. None of the above
13. What price for slaughter hogs will cause returns above all
specified costs to equal zero?
A. $45.25
B. $46.11
C. $46.28
D. $48.17
E. None of the above
14. If the price paid for all feed decreases by 10%, what will be the
per sow returns above all specified costs? (ignore changes in
interest on operating capital)
A. $82.87
B. $131.63
C $255.24
D. $1,020.96.
E. None of the above
15. How much will total costs per sow increase if interest rates rise
to 10%?
A. $32 to $50
B. $51 to $61
C. $62 to $72
D. More than $73
E. None of the above
16. If purchased boars weigh 300 pounds and purchased replacement sows
weigh 200 pounds, what is the whole herd feed conversion
A. 3.04
B. 3.10
C. 3.15
D. 3.20
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, 2006, Mary bought a new hay baler. Mary traded her old
baler which had a remaining book value of $2,610. Mary paid $5,000
"down" and financed the remaining $15,000 over 3 years at 8% interest.
She elected to roll the remaining basis of her old baler into the new
one.
17. The baler is
A. 3-year property
B. 5-year property
C. 7-year property
D. 10-year property
E. None of the above
18. If Mary does not expense any of the cost of the baler, then 2006
depreciation will be (use regular MACRS and mid-year convention)
A. $535.70
B. $815.34
C. $2,142.80
D. $2,422.44
E. None of the above
19. If Mary expenses $5,000 of the baler cost and uses the mid-
quarter convention and regular MACRS, then 2006 depreciation will
be
A. $349.56
B. $1,019.21
C. $2,358.51
D. $3,028.16
E. None of the above
20. If Mary expenses the maximum allowable on the baler and uses
regular MACRS with the mid-year convention, then 1/1/07 remaining
book value will be
A. $0
B. $1,886.74
C. $2,330.36
D. $20,723.26
E. None of the above
21. If Mary does not claim an expense deduction and uses the mid-year
convention and straight line depreciation over the alternate MACRS
life, her 2006 depreciation will be
A. $380.50
B. $1,000.00
C. $1,130.50
D. $2,261.00
E. None of the above
22. Under MACRS, a single purpose agricultural structure 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
2007 State FFA Farm Management Graph for Exam
The above graph represents supply of apples for import into the U.S.
(SF) the supply of apples produced in the U.S. (SUS), the total supply
of apples in the U.S. (ST), the foreign demand for U.S. apples (DF), the
domestic demand for apples (DUS), and the total demand for apples (DT)
in the U.S.
23. What is the market equilibrium price of apples in the U.S.?
A. P1
B. P2
C. P3
D. P4
E. None of the above
24. At the market equilibrium price, how many apples will be exported
from the U.S.?
A. Q1
B. Q2
C. Q3
D. Q4
E. Q5
25. At the market equilibrium price, how many apples will be imported
into the U.S.?
A. Q1
B. Q2
C. Q3
D. Q4
E. Q5
26. At what price would apple imports equal apple exports?
A. P1
B. P2
C. P3
D. P4
E. None of the above
For questions 27 and 28, assume the value of the U.S. dollar weakens
with respect to the currency of our major apple trading partners.
27. The change will cause the U.S. apple imports to
A. increase.
B. decrease.
C. not change.
D. None of the above
28. After the dollar weakens, U.S. equilibrium price of apples should
A. increase.
B. decrease.
C. stay the same.
D. None of the above
PROBLEM V - Marketing
In January, a farmer has 7,000 bushels of corn in the bin. He sells
the corn on April 25. Ignore commissions, storage cost, and interest.
January 5 quotes: April 25 quotes:
May futures price = $3.86 May futures price = $3.45
Expected basis = $0.10 under the board Basis = $0.05 under the board
Strike - May Premiums - - May Premiums -
price Call Put Call Put
$3.50 $0.43 $0.07 $0.33 $0.01
$3.60 $0.33 $0.14 $0.24 $0.03
$3.70 $0.24 $0.22 $0.16 $0.05
$3.80 $0.16 $0.31 $0.09 $0.11
$3.90 $0.09 $0.41 $0.04 $0.20
29. What is the cash price of corn on April 25?
A. $3.35
B. $3.40
C. $3.45
D. $3.50
E. None of the above
30. If the farmer sold one 5,000-bushel futures contract on January 5
and bought back the contract on April 25, what would be the
realized price per bushel (cash + net on futures) for his corn?
A. $3.51
B. $3.69
C. $3.71
D. $3.81
E. None of the above
31. If the farmer sold two 5,000-bushel futures contracts on January 5
and bought both back on April 25, what would be the realized price
per bushel (cash + net on futures) for his corn?
A. $3.69
B. $3.81
C. $3.87
D. $3.99
E. None of the above
32. If the farmer bought one 5,000-bushel $3.60 Put on January 5 and
sold the Put on April 25, what would be the realized price per
bushel (cash + net on options) for his corn?
A. $3.32
B. $3.35
C. $3.45
D. $3.48
E. None of the above
33. If the farmer bought two 5,000-bushel $3.60 Puts on January 5, and
sold the Puts April 25, what would be the realized price per
bushel (cash + net on options) for his corn?
A. $3.24
B. $3.29
C. $3.36
D. $3.56
E. None of the above
34. If the farmer sold his corn on January 5 for $3.75 per bushel and
bought one 5,000-bushel $3.60 May call, then sold the Call on
April 25, his realized price per bushel (cash + net on options)
would be:
A. $3.60
B. $3.66
C. $3.69
D. $3.81
E. None of the above
PROBLEM VI - Diminishing Returns
P. H. Trouble recently purchased a 320-acre farm which the local bank
had acquired. The previous owner had not applied any lime to the farm
in years. P. H. had soil tests run on each of the fields and the
results show a need for more lime than P. H. can afford in one year.
After consulting with his local extension agronomist, P. H. develops
the following table of expected results from liming.
Expected Annual Yield Per Acre
Field #1 Field #2 Field #3
Tons of 40 ac. 120 ac. corn-bean 140 ac.
lime alfalfa rotation fescue
applied hay Corn Beans pasture
per acre (tons) (bu) (bu) (AUM)
0 3.5 130 32 9.4
1 4.0 135 37 9.8
2 4.4 139 41 10.1
3 4.7 142 44 10.4
4 4.8 144 46 10.6
5 4.9 145 47 10.7
Assume alfalfa is worth $100 per ton, soybeans $7.00 per bushel, corn
$3.50 per bushel, and fescue $9 per AUM.
Lime costs $15 per ton (delivered and spread) and should last for 5
years. Therefore, figure $3 per ton per year to compare with the above
table.
35. If money were not a constraint, how much lime should P. H. apply
to the alfalfa?
A. 2 ton per acre
B. 3 ton per acre
C. 4 tons per acre
D. 5 tons per acre
E. None of the above
36. If money is not a constraint, how much lime should P. H. apply to
the fescue pasture?
A. 1 ton per acre
B. 2 ton per acre
C. 3 tons per acre
D. 4 tons per acre
E. None of the above
37. Field #2 is annually planted to 60 acres of corn and 60 acres of
soybeans with the crops being rotated within the field. If money
is not a constraint, how much lime should P. H. apply to Field #2?
A. 2 ton per acre
B. 3 ton per acre
C. 4 tons per acre
D. 5 tons per acre
E. None of the above
38. At what value per AUM would P.H. break even if he applied 3 tons
of lime per acre to the fescue pasture in Field #3?
A. $7.50
B. $9.00
C. $10.00
D. $15.00
E. None of the above
39. Money is a constraint. P. H. can only afford to spend $6,000 (400
tons) on lime. To which fields should this 400 tons be applied?
A. 360 tons to Field #2 and 40 tons to Field #1
B. 320 tons to Field #2 and 80 tons to Field #1
C. 280 tons to Field #2 and 120 tons to Field #1
D. 240 tons to Field #2 and 160 tons to Field #1
E. None of the above
PROBLEM VII - Time Value of Money
Use the following information to answer Questions 40-46.
Present Future Present
Value of Value of Value of
N $1 $1 Annuity
1 0.9434 1.0600 0.9434
2 0.8900 1.1236 1.8334
3 0.8396 1.1910 2.6730
4 0.7921 1.2625 3.4651
5 0.7473 1.3382 4.2124
6 0.7050 1.4185 4.9174
40. What is the present value of a dollar to be received in 4 years?
A. 74.73 cents
B. 79.21 cents
C. $1.26
D. $3.47
E. None of the above
41. A field of alfalfa will produce $1,000 during the first year,
$3,000 during each of the next 4 years and $2,000 in the sixth
year. To the nearest dollar, what is the present value of this
income stream?
A. $10,431
B. $12,160
C. $12,301
D. $13,104
E. None of the above
42. A beef cow produces after-tax returns at the end of the year of
$70/year for 5 years and can be sold for $400 after-tax at the end
of the fifth year. Assume the above table uses the appropriate
discount rate and determine the current value of the cow to the
nearest dollar.
A. $285
B. $478
C. $496
D. $594
E. None of the above
43. With one year of income remaining in the beef cow in Question 42,
how much should she be worth, to the nearest dollar, using the
above tables?
A. $406
B. $443
C. $455
D. $470
E. None of the above
44. If the farmer expects interest rates to increase, but no change in
net returns to cattle, what impact is this likely to have on the
present value of the beef cow?
A. Decrease the present value
B. Increase the present value
C. Would not change the present value
D. Cannot tell
45. What is the annual payment on a $20,000 loan amortized over 4
years?
A. $4,747.89
B. $5,244.94
C. $5,771.84
D. $5,904.58
E. None of the above
46. What discount rate is used in the above table?
A. 6.0%
B. 7.0%
C. 8.0%
D. 9.5%
E. None of the above
PROBLEM VIII - Financial Analysis
Bill Blackacre is a cash basis taxpayer. His farm records for 2006
show the following:
2006 Farm Sales $201,976
2006 Interest Paid 22,475
2006 Net Farm Profit 38,107
2006 Depreciation 40,560
2006 Gain in Inventory 29,800
1/1/07 Total Assets 912,689
1/1/07 Total Liabilities 300,972
47. Bill's capital turnover rate (sales plus inventory change divided
by assets) is
A. 18.86%
B. 22.13%
C. 25.39%
D. 30.82%
E. None of the above
48. Bill's interest expense as a percent of sales is
A. 11.13%.
B. 7.22%.
C. 5.67%.
D. 3.77%.
E. None of the above
49. Bill's net farm profit does not include a charge for his own labor
(which he values at $20,000 per year). Bill will have to pay
self-employment taxes on
A. $18,107.
B. $20,000.
C. $38,107.
D. $67,907.
E. None of the above
50. Bill's operating margin (profit plus inventory change) as a
percent of sales was
A. 3.17%.
B. 4.79%.
C. 15.03%.
D. 33.62%.
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.
----------------------------------------------------------------------
2007 MISSOURI FFA FARM MANAGEMENT CONTEST
KEY
Multiple Choice
1. C 11. A 21. A 31. D 41. A
2. D 12. A 22. A 32. A 42. C
3. B 13. C 23. B 33. A 43. C
4. C 14. C 24. B 34. B 44. B
5. D 15. A 25. A 35. B 45. B
6. C 16. C 26. C 36. C 46. D
7. A 17. B 27. C 37. D 47. B
8. A 18. D 28. B 38. C 48. C
9. C 19. B 29. C 39. B 49. D
10. A 20. C 30. D 40. B 50. B
Problems
1. A 11. B 21. C 31. D 41. B
2. B 12. D 22. B 32. A 42. D
3. C 13. C 23. C 33. A 43. B
4. A 14. A 24. B 34. C 44. A
5. E 15. B 25. A 35. D 45. C
6. A 16. B 26. D 36. A 46. A
7. A 17. C 27. B 37. D 47. C
8. A 18. D 28. A 38. C 48. A
9. B 19. C 29. B 39. C 49. C
10. D 20. C 30. B 40. B 50. D