1. A farm business which is described as being highly leveraged is one where: a. Total liabilities are high relative to net worth. b. Total liabilities are low relative to net worth. c. Net farm income is high relative to total assets. d. Net farm income is low relative to total assets. e. Current liabilities exceed current assets. 2. Fred Feeder would like to calculate the value of the feed he fed his cattle. He has compiled the following facts: Beginning feed inventory$10,000 Feed purchased Feed sold Feed produced. $ 6,000 $ 2,000 $25,000 What is the value of the feed that was fed to Fred's cattle? a. $31,000 b. $25,000 c. $24,000 d. $15,000 e.$6,000 3. The own-price elasticity of demand estimates the impact on the quantity of a good demanded by a change in the price of the good. Normally, one would expect the own price elasticity of demand to be a. positive. b. negative. c. zero. d. none of the above. 4.The fi shown by nancial progress being made in a farm business from one year to the next is best a. A change in total assets. b. A change in net worth c. A change in liabilities. d. A cash basis income tax statement or tax return Schedule F. e. A change in cash available. 5. In order to reduce risk, a farmer might do all of the following except: a. Hedge on a commodities exchange. b. Plant several different crops in his rotation c. Carry insurance on his crops d. Forward contract the sale of some of his crop. e. Choose the combination of tract the son of 6. The advantage of leasing a combine rather than buying it is that: a. A leased combine can be depreciated more rapidly than a purchased one b. Leasing the combine may require less "up-front" money c. Leasing a combine will always be less expensive in the long run d. All of the above. For Questions 7-11: Farmer Brown has taken inventory and has collected the following information on the value of ev Land and buildings Crops in storage Mortgage on land... Machinery owned Loans owed on machinery Taxes owed Cash on ing he owns and owes as of December 31 $35,000 $14,000 S4 30,000 Feeder livestock owned $225,000 Cash rent owed to his landlord.$.6,000 $ 65,000 Feed in storage S 12,000 Production $ 2,000 loan 1,000 Supplies in storage $ 7,000 $ 500 $ 3,000 Fuel in stor 7. The total value of Brown's assets is: a. $554,500 c. $565,500 d. $577,500 e $255,000 8. The total value of Brown's liabilities is: a. $58,000 b. $249,000 c. $255,000 d.$253,000 e. $554,500 9. Brown's net worth is: a. $303,500 b. $299,500 c. $316,500 d. $296,500 e. $554,500 10. Brown owns eurrent assets of a. $556,500 b. $400,000 e. $3,000 d. $500 e. $56,500 11. Brown owes current liabilities of a. $253,000 b. $225,000 c. $6,000 d. $16,000 e. $9,000 12. The maxi-min strategy for choosing among risky alternatives assumes that the farm manager is most concerned with: a. achieving a high average return b. achieving the best possible result in a good year c. achieving the best possible result in a bad year d. minimizing the chances of suffering a loss 13. Harry Highgate had a net farm income last year of $40,000. Opportunity costs for unpaid family labor and management were $30,000. Equity in the business was $200,000. What was the percent return on his equity? a. 10% b. 20% c. 5% d. 15% e. 3% 14. A farmer has total assets of $500,000 which includes a market value of $300,000 on land and a debt to equity ratio is 1.0. His lender values the land at book value which is 10% less than market value. What is the farmer's debt to equity ratio at book value? a. 0.88:1 20. How should you value enterprise budget? a. Cash invested in growing crops. b. Variable production costs of the homegrown f c. Net selling price of the homegrown feeds. d. Zero-they have no value eeds. 21. The main goal of income tax management is to: a. Minimize before-tax income. b. Minimize total taxes paid. c. Maximize taxes paicd. d. Maximize taxable income. e. Maximize after-tax income. 22. For which of the following sets of unemployment and inflation rates will the Federal Reserve Board be the most reluctant to increase interest rates? a.10% b. 10% c. 10% d.5% 2% 5% 10% 5% 23. Which of the following items will not appear on either the Jan. i, 2012 or Jan. 1, 2013 balance sheets? a. A mortgage owed and not yet repaid in 2012. b. Money borrowed during 2012 and not yet repaid. c. Feeder pigs purchased, fed, and then sold during 2012. d. Tractor sold during 2012. e. Grain harvested in 2012 and put in storage. 24. A soybean producer decides to store soybeans in the local elevator for five months. The price at harvest is $6.00 per bushel and the elevator charges $0.02 per bushel per month for storage plus a one-time $0.05 per bushel handling charge. The producer has 4,000 bushels to store and must borrow $24,000 at 8% annual interest in order to store the soybeans. What price must be received for the soybeans to break even and cover storage and opportunity costs? a, $6.15 b. $6.20 c. $6.25 d. $6.35 e. None of the above. 25. A farmer has debt to equity ratio of 2:1. The current liabilities are $50,000 and the non-current (intermediate and long-term) liabilities are $70,000. What is the value of the assets? a. $240,000 b. $120,000 c. $ 60,000 d. $180,000 e. Cannot be determined with information provided. 26. On April 1, Karen Constalk borrowed $8,000 to buy supplies to plant her corn. On November 1, she repaid the $8,000 along with $495 interest. What annual interest rate did she pay on the loan'? a. 6.1 87% b. 9.281% . 10.607% d. 12.375% e. 16.1 6% 27. Tom Farmer earned $20,000 from farming last year after paying all costs including the value of his labor and management. His total assets are valued at $380,000. He has outstanding mortgages, loans, and other debts of $125,000. What rate of return did he a. 5.26% b. 5.55% c. 7.84% d. 10.50% e. 16.0% 28. Dryland corn in eastern Nebraska has an expected yield of 90 bushels per acre and has a production cost of $140.00 per acre. Expected market prices are $2.50 per bushel for corn and $6.00 per bushel for soybeans. Soybeans can be raised with a production cost of $120.00 per acre. At what yield per acre would soybeans generate the same net return per acre as corn? a. 25.6 bushels b. 29.1 bushels c. 34.2 bushels d. 38.7 bushels e. 47.6 bushels