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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
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 on assets for this year was $150,000 and he had to pay $21,000 in taxes. Their family consumption rate is 30%. Consumption rate =30% John knows that there is some variability in the total production. This causes his return on assets (ROA) to vary. In 10% of the years, his return on assets is $120,000, in 50% of the years it is $150,000 and the rest of the time the return on assets is $200,000. 6. Determine John's growth of equity under risk. 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 on assets for this year was $150,000 and he had to pay $21,000 in taxes. Their family consumption rate is 30%. Consumption rate =30% John knows that there is some variability in the total production. This causes his return on assets (ROA) to vary. In 10% of the years, his return on assets is $120,000, in 50% of the years it is $150,000 and the rest of the time the return on assets is $200,000. 6. Determine John's growth of equity under risk
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