4. Total assets end of the year (A) = $300,000, Net Farm Income (NFI) = $25,000, Interest Expense (Id) = $20,000, and Leverage ratio (D/E) = 0.5. a. Calculate owner equity (E) (5 points) b. Calculate liabilities (D) (5 points) c. Calculate the rate of return on farm equity (ROFE) and the cost of farm debt (COFD) (5 points) d. What is the absolute return to assets (R) and the rate of return to farm assets (ROFA)? (5 points) 593 words English (United States) Focus CR 6.1. T F The interest component of amortized loan payments does not change over time, while the principal component steadily increases. 6.2. TF Cost of farm debt is measured as the ratio of interest expense to farm assets. 6.3. T F Operating inputs are financed with farm profits. 6.4. T F Decreasing the compounding frequency reduces the loan balance more rapidly, which reduces the total interest paid. 6.5. T F Under standard operating loan contracts, separate transaction is made each time financing is needed. 593 words TK English (United States) Focus = 4. Total assets end of the year (A) = $300,000, Net Farm Income (NFI) = $25,000, Interest Expense (Id) = $20,000, and Leverage ratio (D/E) = 0.5. a. Calculate owner equity (E) (5 points) b. Calculate liabilities (D) (5 points) c. Calculate the rate of return on farm equity (ROFE) and the cost of farm debt (COFD) (5 points) d. What is the absolute return to assets (R) and the rate of return to farm assets (ROFA)? (5 points) 593 words English (United States) Focus CR 6.1. T F The interest component of amortized loan payments does not change over time, while the principal component steadily increases. 6.2. TF Cost of farm debt is measured as the ratio of interest expense to farm assets. 6.3. T F Operating inputs are financed with farm profits. 6.4. T F Decreasing the compounding frequency reduces the loan balance more rapidly, which reduces the total interest paid. 6.5. T F Under standard operating loan contracts, separate transaction is made each time financing is needed. 593 words TK English (United States) Focus =