Answered step by step
Verified Expert Solution
Question
1 Approved Answer
A. Crop Share versus Cash Rent Lease Analysis Use information from 3 years of crop production records to compare how much it cost (or
A. Crop Share versus Cash Rent Lease Analysis Use information from 3 years of crop production records to compare how much it cost (or would have cost) to rent land under a crop share lease compared to a cash lease. The indirect cost of a crop share lease can be computed by estimating: (1) the value of the land owner's share (50%) of the gross income, minus (2) the value of the land owner's share (50%) of the input costs (seed, fertilizer, pesticides and drying). Round values to the nearest whole S Year 1 Year 2 Year 3 Corn Soybeans Corn Soybeans Corn Soybeans 1. Average selling price, S/bu. $4.95 10.75 $3.40 $8.60 $6.10 $11.00 2. Average yield, bu./a. 166 48 180 60 150 42 3. Gross income, S/acre (price x yield). 4. Average gross for corn and soybeans 5. Landowner share of gross income (50%) 6. Value of input costs, $/acre $296 $136 $296 $136 $296 $136 7. Average input cost for corn and soybeans 8. Landowner share of input costs (50%) 9. Net cost of crop share rent (5 minus 8) 10. Cash rent in same year $210 $210 $210 11. Which type of rent was cheaper? 12. In what type of year would you expect a crop share lease to be cheaper than a cash lease? More expensive? 11. Which type of lease arrangement would you consider to be the riskiest for the tenant and why?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started