17. Net worth (equity) is a measure of: a. Managerial ability.

b. Financial position. c. Profitability.

d. Liquidity.

e. Cash flow.

18. A farmer is able to produce 300 cwt. of potatoes per acre using 500 pounds of fertilizer. With the application of 600 pounds of fertilizer, the farmer can produce 320 cwt.; at 700 pounds, 330 cwt. are produced; at 800 pounds, production goes to 335 cwt.; and at 900 pounds, 340 cwt. are produced. Assume that fertilizer can be added only in 100 pound increments. If potatoes sell for $3 per cwt. and fertilizer costs $14 per hundred pounds, how many pounds of fertilizer should be applied per acre to maximize net income?

a. 500 b. 600 c. 700 d. 800 e. 900

19. The total amount borrowed on a loan may be increased without increasing the annual payments on the loan by:

a. Raising the interest rate.

b. Increasing the number of years of repayment. c. Reducing production costs.

d. Buying more land.

e. Paying off the loan in fewer years.

20. How should you value home-grown feeds such as corn or hay in a livestock feeding enterprise budget?

a. Cash invested in growing crops.

b. Variable production costs of the homegrown feeds. c. Net selling price of the homegrown feeds.

d. Zero.

21. The main goal of income tax management is to: a. Minimize before-tax income.

b. Minimize total taxes paid.

c. Maximize taxes paid.

d. Maximize taxable income. e. Maximize after-tax income.

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22. 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

23. Which of the following items will not appear on either the Jan. 1, 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 Cornstalk 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. 6.187% b. 9.281% c. 10.607% d. 12.375% e. 16.16%

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 earn on his equity?

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

29. A farmer is considering purchasing a combine. Annual combine ownership costs will be 20% of the purchase price. The annual operating costs will be $9,000 per year. The machine will increase income by $3,000 per year due to increased harvested yields through better timeliness and save $10,000 in custom combining costs. What is the maximum the farmer can pay for the combine and increase annual profit?

a. $5,999

b. $49,999 c. $109,999 d. $10,999 e. $19,999

30. Inflation means:

a. A dollar will buy more in the future than it will buy today.

b. The prices are which the interest rate will equal the inflation rate.

c. The farmer's profit margin will increase over time due to higher prices. d. The purchasing power of a dollar declines over time.

e. Value of all products will decrease over time.

31. On November 1 the local corn price is $6.75 and Carl Corngrower is deciding whether to sell his crop now or store it to try and get a better price. Storage costs and opportunity cost for storage are 4 cents per bushel per month. What price would the local elevator need to be paying on January 15 to break even storing the corn?

a. $6.75

b. $6.79 d. $6.85 c. $6.81 e. $6.87