2010 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 2009, the social security wage base was
A. $94,200
B. $97,500
C. $102,000
D. $106,800
E. None of the above
2. A farmer purchases 550-pound feeder steers for $1.20 per pound and
plans to sell the steers at 800 pounds. The farmer estimates the total
cost of gain to be 50 cents per pound. The nearest breakeven price
when the steers are sold at 800 pounds is
A. 88.2 cents/pound
B. 90.6 cents/pound
C. 95.4 cents/pound
D. 98.1 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 $3.50 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
$17,500 at 7% 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. $3.55
B. $3.63
C. $3.68
D. $3.71
E. None of the above
8. Which of the following farm items is not eligible to be depreciated?
A. A machine shed constructed by the farmer
B. A used tractor purchased from a neighbor
C. A new pickup
D. Raised heifers added to the breeding herd
E. None of the above
9. Advantages of incorporating the farm business include all of the
following except
A. limiting personal liability.
B. better income tax treatment for fringe benefits.
C. simpler record keeping.
D. facilitates multiple owners.
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. Carrie Cattlefeeder buys feeder cattle and corn and sells fed cattle.
If she wants to be totally hedged in the futures market for her price
risk in the coming year, she would be
A. "short" fed cattle, "long" feeder cattle, and "long" corn.
B. "short" fed cattle, "short" feeder cattle, and "short" corn.
C. "short" fed cattle, "short" feeder cattle, and "long" corn.
D. "long" fed cattle, "short" feeder cattle, and "short" corn.
E. None of the above
12. The best indication that a farmer is making financial progress year-to-
year is
A. an increase in the value of total assets on the balance sheet.
B. a decrease in the value of total liabilities on the balance
sheet.
C. an increase in net worth on the balance sheet.
D. an increase in total cash flow on the cash flow statement.
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. The maximum amount that can be claimed as a Section 179 expense
deduction on your 2009 tax return is
A. $5,000.
B. $25,000.
C. $100,000.
D. $250,000.
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 $2,000 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 80 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. $0.644
D. $1.554
E. None of the above
20. A producer sells 9 feeder steers for $105/cwt. The average weight per
steer is 752 pounds. There is a 2% sales commission and yardage fees
of $2.50 per head. The net amount received for the pen of steers would
be
A. $771.31
B. $6,028.36
C. $6,941.77
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 farmer's net returns per acre for establishing alfalfa the first year
are negative, but he makes money for each of the next four years before
the alfalfa has to be reestablished. In preparing an enterprise budget
to compare alfalfa with other crops
A. he should use only the returns after the alfalfa has been
established.
B. he should decrease the annual returns after the alfalfa has
been established by the cost of establishing the crop.
C. he should decrease the annual returns after the alfalfa has
been established by 20% of the establishment year losses to
cover the cost of establishment.
D. he should amortize the establishment year losses over the
remaining four years.
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. When an increase in production of one enterprise causes a reduction in
the production of another enterprise, the two enterprises are said to
be
A. independent.
B. complementary.
C. supplementry.
D. competitive.
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 150 bushels per acre and has a production
cost of $275.00 per acre. Current market prices are $3.40 per bushel
for corn and $9.25 per bushel for soybeans. Soybeans can be raised at
a production cost of $140 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. 40.5 bushels
D. 42.0 bushels
E. None of the above
29. The primary goal of income tax management for a farm operator is to
A. minimize income taxes paid.
B. maximize the taxable income.
C. minimize the taxable income.
D. maximize the farm's after tax income.
E. None 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 for wheat producers.
B. increase the total revenues for wheat producers.
C. decrease the total revenues for wheat producers.
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.
In December 2009, cash basis farmer, G. T. Leavenworth, estimates his
adjusted gross income for the year to be $50,000. This will give him
marginal tax rates of 28% on the federal income tax, 15.3% on self-
employment (Social Security and Medicare), and 6% on the Missouri
income tax. He will not itemize on his federal tax return.
47. Mr. Leavenworth has some wheat in the bin that he is considering
selling. If he sells $2,500 worth in December, it will increase his
2009 net farm income by $2,500 and increase his 2009 self-employment
tax by $______. (Hint: only 92.35% of net farm income is subject to
the self-employment tax.)
A. $176.62
B. $353.24
C. $382.50
D. $700.00
E. None of the above
48. If Mr. Leavenworth sells $2,500 worth of wheat in December, how much
will it add to his federal income tax obligation? (Hint: 50% of self-
employment taxes are deductible on the federal income tax form.)
A. $491.39
B. $523.38
C. $650.55
D. $700.00
E. None of the above
49. If Mr. Leavenworth sells $2,500 worth of wheat in December, how much
will it add to his Missouri income tax obligation? (Hint: The federal
income tax is deductible on the Missouri tax form.)
A. $108.00
B. $110.97
C. $118.60
D. $120.52
E. None of the above
50. If Mr. Leavenworth sells $2,500 worth of wheat in December, how much
will it add to his 2009 income tax and self-employment tax obligation?
A. $1,114.76
B. $1,235.65
C. $1,360.94
D. $1,455.13
E. None of the above
--------------------------------------------------------------------------------
2010 MISSOURI FFA FARM MANAGEMENT CONTEST
Problems Section
Choose the best answer and mark the corresponding numbered space on the answer
sheet. Each question is worth four (4) points. There is only one correct
answer for each question. Answers have been rounded.
PROBLEM I - Balance Sheet
Using the information below, complete the net worth statement for January 1,
2010:
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . $750,000
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . 16,500
Machinery and equipment . . . . . . . . . . . . . . . . . . . 310,000
Cows . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,000
Calves . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,600
Sows and boars. . . . . . . . . . . . . . . . . . . . . . . . 45,000
Market hogs . . . . . . . . . . . . . . . . . . . . . . . . 140,000
Checking and savings. . . . . . . . . . . . . . . . . . . . . 17,800
Soybeans. . . . . . . . . . . . . . . . . . . . . . . . . . . 38,400
Hog buildings . . . . . . . . . . . . . . . . . . . . . . . . 74,000
Feed and hay. . . . . . . . . . . . . . . . . . . . . . . . . 12,500
Accrued interest owed . . . . . . . . . . . . . . . . . . . . 29,660
Accrued taxes owed. . . . . . . . . . . . . . . . . . . . . . 23,750
30-year land loan balance is $320,000.
$16,000 plus interest is due February 1 of each year.
7-year hog building loan balance is $44,000.
$11,000 plus interest is due August 31 of each year.
5-year equipment loan balance is $78,016.
$19,504 plus interest is due each February 1.
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, 2010, was:
A. $68,700
B. $208,700
C. $227,300
D. $346,300
E. None of the above
2. The total value of non-current assets was:
A. $750,000
B. $1,134,000
C. $1,185,000
D. $1,230,000
E. None of the above
3. The total value of current liabilities was:
A. $69,910
B. $116,414
C. $149,414
D. $174,926
E. None of the above
4. The total value of non-current liabilities was:
A. $425,177
B. $442,016
C. $452,652
D. $511,926
E. None of the above
5. The net worth was:
A. $511,926
B. $834,483
C. $945,374
D. $1,457,300
E. None of the above
6. The current ratio was:
A. 0.351
B. 0.512
C. 1.953
D. 2.847
E. None of the above
7. The working capital was:
A. $17,800
B. $110,886
C. $227,300
D. $945,374
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, 32,000 seed population 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. 3.400 21.300 $72.42 __________
Nitrogen (N) Lbs. 0.450 200.000 90.00 __________
Phosphate (P2O5) Lbs. 0.410 50.00 20.50 __________
Custom harvest Acre 30.000 1.00 30.00 __________
Custom hauling Bu. 0.110 180.00 19.80 __________
Rent fert. spreader/ac. Acre 2.440 3.000 7.32 __________
Insecticide Acre 22.800 1.000 22.80 __________
Herbicide Acre 18.120 1.000 18.12 __________
Annual operating capital Dol. 0.100 70.000 7.00 __________
Machinery labor Hour 12.000 1.960 23.52 __________
Irrigation labor Hour 12.000 0.950 11.40 __________
Mach. fuel, lube, repair Dol. 24.39 __________
Irrig. fuel, lube, repair Dol. 51.10 __________
Total operating costs $398.37 __________
Fixed costs
Machinery: Amount Value
Interest at 8.0% 245.00 19.60 __________
Depr., taxes, insurance 26.89 __________
Irrigation:
Interest at 8.0% 314.20 25.14 __________
Depr., taxes, insurance 36.00 __________
Total fixed costs $107.63 __________
Production Units Price Quantity Value
Corn Bu. 3.50 180.00 630.00 __________
Total receipts 630.00 __________
Returns above total operating costs 231.63 __________
Returns above all specified costs 124.00 __________
_______________________________________________________________________
8. The return above total operating cost per acre is:
A. $107.63
B. $124.00
C. $231.63
D. $398.37
E. None of the above
9. How many hours of labor are budgeted per acre?
A. 1.96
B. 2.91
C. 12.00
D. 34.92
E. None of the above
10. What is the total budgeted interest cost per acre?
A. $19.60
B. $44.74
C. $51.74
D. $107.63
E. None of the above
11. What price per bushel is paid for seed corn?
A. $3.40
B. $21.30
C. $72.42
D. $190.40
E. None of the above
12. What is the total specified fertilization cost per acre? (ignore cost of
labor and operating capital)
A. $90.00
B. $110.50
C. $117.82
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. 17.47
B. 32.07
C. 35.33
D. 48.61
E. None of the above
14. What yield will cause returns above all specified costs to equal zero?
A. 113.8 bu.
B. 144.6 bu.
C. 148.8 bu.
D. 180.0 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. -$86.00
B. $4.57
C. $71.14
D. $82.67
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. $3.63
B. $3.71
C. $4.09
D. $4.22
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 April 5, 2009, Sam traded planters. The old planter had a remaining
undepreciated value of $5,709. Sam paid $26,000 "boot" in the trade for the
new planter. He elects to roll the basis of the used planter into the new
one.
17. The planter is:
A. 3-year property
B. 5-year property
C. 7-year property
D. 10-year property
E. None of the above
18. If Sam does not expense any of the cost of the planter, then 2009
depreciation will be (use MACRS and mid-quarter convention):
A. $3,397.30
B. $4,246.79
C. $4,756.35
D. $5,945.44
E. None of the above
19. If Sam expenses the maximum on the planter trade, and uses the mid-year
convention and MACRS, then 2009 depreciation will be:
A. $0.00
B. $285.45
C. $611.67
D. $856.35
E. None of the above
20. If Sam does not expense any of the cost and uses the mid-year convention
and straight line depreciation over the alternate MACRS life, his 2009
depreciation will be:
A. $1,585.45
B. $2,264.93
C. $3,170.90
D. $4,529.86
E. None of the above
21. If Sam uses MACRS, then the first year the planter will appear on Sam's
January balance sheet with a zero book value will be in
A. 2013.
B. 2014.
C. 2015.
D. 2016.
E. None of the above
22. Under MACRS, a computer is classified as
A. 3-year property
B. 5-year property
C. 7-year property
D. 10-year property
E. None of the above
PROBLEM IV - Supply and Demand
(See graph in separate file)
The above graph represents the supply of foreign pork available 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).
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?
A. Q1
B. Q2
C. Q3
D. Q4
E. Q5
26. Without foreign trade, the equilibrium price of pork would be
A. P1
B. P2
C. P3
D. P4
E. None of the above
27. P3 times Q2 equals
A. the total value of pork imports.
B. the total value of pork exports.
C. value of imports minus exports.
D. value of exports minus imports.
E. None of the above
28. What is the value of pork consumed in the U.S.?
A. P1 times Q1
B. P2 times Q2
C. P3 times Q3
D. P3 times Q5
E. None of the above
PROBLEM V - Marketing
On December 1, a farmer has 5,000 bushels of corn in his bin. He sells it on
February 15. Ignore commissions, storage cost, and interest.
December 1 quotes: February 15 quotes:
March futures price = $4.20 March futures price = $4.15
Expected basis = $0.10 under the board Basis = $0.15 under the board
Strike --- Premiums --- --- Premiums ---
price Call Put Call Put
$3.80 $0.42 $0.01 $0.38 $0.01
$3.90 $0.32 $0.01 $0.28 $0.01
$4.00 $0.23 $0.01 $0.18 $0.01
$4.10 $0.15 $0.02 $0.09 $0.02
$4.20 $0.09 $0.08 $0.02 $0.05
$4.30 $0.04 $0.16 $0.01 $0.13
29. What is the local cash price of corn on February 15?
A. $4.00
B. $4.10
C. $4.15
D. $4.30
E. None of the above
30. If the farmer sold a futures contract on December 1 and bought back the
contract on February 15, what would be the realized price per bushel
(cash + net on futures) for the corn?
A. $4.05
B. $4.10
C. $4.20
D. $4.25
E. None of the above
31. If the farmer bought a $4.20 Put on December 1 and sold the Put on
February 15, what would be the realized price per bushel (cash + net on
options) for his corn?
A. $3.92
B. $3.97
C. $4.03
D. $4.12
E. None of the above
32. If the farmer bought a $4.20 Put and sold a $4.20 Call on December 1, and
sold the Put and bought back the Call on February 15, what would be the
realized price per bushel (cash + net on options) for his corn?
A. $3.96
B. $4.04
C. $4.19
D. $4.21
E. None of the above
33. Given all the information above, which of the following actions taken on
December 1 turned out to be the most profitable?
A. Selling a futures contract.
B. Buying a $4.20 Put option.
C. Buying a $4.20 Put and selling a $4.20 Call.
D. Taking no market action.
34. Which of the following statements is true?
A. The cost of a futures contract usually declines as it nears
expiration.
B. The cost of a futures contract usually rises as it nears
expiration.
C. The cost of a Put usually declines as it nears expiration.
D. The cost of a Put usually rises as it nears expiration.
E. None of the above
PROBLEM VI - Biofuels
Ethanol plants usually use corn to produce ethanol, dried distillers grain
with solubles (DDGS), and carbon dioxide. A typical ethanol plant will
produce 2.75 gallons of ethanol, 17 pounds of DDGS, and 17 pounds of carbon
dioxide per bushel of corn.
35. Missouri has several ethanol plants which have a rated capacity of 45
million gallons of ethanol per year. How many bushels of corn would a 45
million gallon ethanol plant use per year operating at capacity?
A. 16.36 million bushels
B. 24.17 million bushels
C. 45.00 million bushels
D. 123.75 million bushels
E. None of the above
36. How many tons of DDGS would a 45 million gallon ethanol plant produce per
year operating at capacity?
A. 16,360 tons
B. 78,105 tons
C. 139,091 tons
D. 278,182 tons
E. None of the above
37. If, in addition to the cost of the corn, it costs 4 cents per pound of
corn to process corn through an ethanol plant, what is the annual non-
corn operating cost for a 45 million gallon plant?
A. $0.7 million
B. $7 million
C. $37 million
D. $108 million
E. None of the above
38. If ethanol is worth $1.70 per gallon, DDGS is worth $120 per ton, and
carbon dioxide is worth 0.5 cents per pound, what is the value of the
products from a bushel of corn processed in a typical ethanol plant?
A. $5.78
B. $6.98
C. $7.20
D. $7.96
E. None of the above
39. If ethanol is worth $1.70 per gallon, DDGS is worth 90% of the price of a
ton of corn, carbon dioxide is worth 0.5 cents per pound, and operating
costs are 4 cents per pound of corn, what is the breakeven price a
typical ethanol plant can pay for a bushel of corn?
A. $3.12
B. $3.47
C. $3.98
D. $4.51
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 a $1 a $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 5 years?
A. 74.73 cents
B. 79.21 cents
C. $1.34
D. $4.21
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. $11,431
B. $11,764
C. $12,160
D. $13,633
E. None of the above
42. A beef cow produces after-tax returns at the end of the year of $75/year
for 6 years and can be sold for $500 after-tax at the end of the sixth
year. Assume the above table uses the appropriate discount rate and
determine the current value of the cow to the nearest dollar.
A. $352
B. $369
C. $572
D. $721
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. $470
B. $489
C. $512
D. $542
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. Use the table on the preceding page to calculate the annual payment on a
$20,000 loan amortized over 5 years.
A. $4,747.89
B. $5,244.94
C. $5,407.86
D. $5,904.58
E. None of the above
46. What discount rate is used in the above table?
A. 5.0%
B. 6.0%
C. 7.0%
D. 8.0%
E. None of the above
PROBLEM VIII - Exchange Rates
Canadian Mexican Japanese Chinese European
Dollars Pesos Yen Yuan Euros
per US $ per US $ per US $ per US $ per US $
Jan 00 1.45 9.49 105.3 8.28 0.987
Jan 05 1.22 11.26 103.3 8.28 0.762
Jan 06 1.16 10.54 115.5 8.07 0.825
Jan 07 1.18 10.96 120.5 7.79 0.770
Jan 08 1.01 10.91 107.8 7.24 0.679
Jan 09 1.22 13.88 90.1 6.84 0.755
Jan 10 1.04 12.81 91.1 6.83 0.701
Illinois Kansas Iowa Nebraska
Corn Wheat Pork Beef
$/bu. $/bu. $/cwt. $/cwt.
Jan 00 1.95 2.51 57.65 114.92
Jan 05 1.86 3.43 73.98 148.40
Jan 06 1.98 3.52 61.50 155.19
Jan 07 3.66 4.53 63.70 149.96
Jan 08 4.55 8.55 56.71 146.41
Jan 09 4.34 5.79 57.24 138.94
Jan 10 3.63 4.61 64.47 140.89
47. Valued in Japanese Yen, how much did Nebraska beef prices decrease from
January 2006 to January 2008?
A. 11.9%
B. 14.0%
C. 20.1%
D. 30.8%
E. None of the above
48. Valued in Euros, how much did Illinois corn prices decrease from January
2007 to January 2010?
A. 0.8%
B. 9.0%
C. 9.7%
D. 13.5%
E. None of the above
49. Valued in Canadian dollars, how much did Iowa pork prices decline from
January 2005 to January 2008?
A. 23.3%
B. 27.9%
C. 36.5%
D. 63.5%
E. None of the above
50. Valued in Mexican pesos, how much did the price of Kansas wheat increase
from January 2000 to January 2008?
A. 240.6%
B. 291.6%
C. 340.6%
D. 391.6%
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.
------------------------------------------------------------------
2010 STATE FFA FARM MANAGEMENT CONTEST
Key
Multiple Choice
1. D 11. A 21. A 31. B 41. C
2. D 12. C 22. D 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. D 26. B 36. B 46. D
7. D 17. C 27. C 37. C 47. B
8. D 18. B 28. C 38. A 48. C
9. C 19. C 29. D 39. D 49. B
10. A 20. C 30. B 40. B 50. A
Problems
1. C 11. D 21. C 31. B 41. C
2. D 12. C 22. B 32. B 42. D
3. B 13. C 23. C 33. A 43. D
4. E 14. B 24. A 34. C 44. A
5. C 15. A 25. B 35. A 45. A
6. C 16. D 26. B 36. C 46. B
7. B 17. B 27. B 37. C 47. A
8. C 18. D 28. C 38. A 48. C
9. B 19. D 29. A 39. B 49. C
10. C 20. A 30. A 40. A 50. B
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