A farm manager is looking at purchasing an additional 75 acres of land. Prepare a partial budget for the manager, using the following information and the partial budget form on the following page. 1. Purchase price is $18,000/ac. Of the total price of the land, the farmer intends to mortgage $1,000,000. At the time of purchase, he is able to make a down payment of the remaining amount. The mortgage will be financed at 4% interest, with a 20 -year amortized loan with equal principal payments. Besides the annual interest payment, he will include his principal as an annual cost in the partial budget to make sure that the farm has this cash flow. What is the annual principal payment? (1 mark) What is the Year 1 interest payment? (1 mark) 2. He will use the following corn costs in the partial budget for Year 1: - Seed cost: $100/ac - Fertilizer: $200/ac - Herbicide: $24/ac - Propane fuel for corn drying estimated at $2,500 per 100 ac. - Diesel fuel: $25/ac - Crop insurance estimated at $10/ac - Property taxes estimated at $500/yy 3. The farm manager is expecting to use 15 of these acres to feed his cattle which will save him approximately $15,000 per year. He plans to sell the remaining acres at a selling price of $9.25/ bu. The average corn yield is 195bu/ac on the home farm, and he expects that the additional 75 acres will yield 90% of the home farm corn yield average. What is the revenue from the sale of the corn? (1 mark) 4. List 2 factors that should be considered in this partial budget. (2 marks) 5. Should the farm manager purchase these additional acres for corn? Yes or no, and why? (1 mark) Partial Budget Form, Additional 75 acres (18 marks) Total Net Change in Income (B minus A)=