Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

John is a Minnesotan arable farmer with 6 0 hectares of land. His main crop is consumption potatoes. His total assets are worth $ 3

John is a Minnesotan arable farmer with 60 hectares of land. His main crop is consumption potatoes. His total assets are worth $3,600.000, and he has a loan outstanding of $750,000 over which he pays 6% interest. Their return to assets for this year was $150,000 and he had to pay $21,000 in taxes. Their family consumption rate is 30%.
Assets =$3,600,000
Liabilities =$750,000
Equity =$3,600,000-$750,000=$2,850,000
Interest Rate =6%
Interest (6% of liabilities)=$45,000
Return to assets (percentage of Assets)=$150,000
Taxes (percentage of taxable income)=$21,000
Consumption Rate =30%
What is the net inco

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Mergers And Acquisitions Integration Handbook

Authors: Scott C. Whitaker

1st Edition

111800437X, 978-1118004371

More Books

Students also viewed these Finance questions

Question

.... NH + NS .... NH + NS

Answered: 1 week ago