Partial Budget: (15 Points) Assume you are a ryegrass farmer farming 1000 acres. Your neighbor offers to rent you 250 additional acres for $115/acre. Your existing farm machinery would be sufficient to handle the extra 250 acres. You figure you can get a yield of 2000 lbs/acre from the 250 acres and the price of ryegrass is $.30 per pound. The following figures represent your current production costs per acre for ryegrass: Work Dirt Plant, Fertilizer, Fuel $25.00 Chemicals Windrow Combine Cleaning $75.00 Bags Labor Interest rate on Operating capital: $16.00 $40.00 $40.00 $15.00 $50.00 $60.00 3% Assume all operating capital (including rent) is borrowed Use a partial budget to determine the effect of this decision on net farm income and calculate the Break Even Point ($/lb). Would you or would you not rent the additional 250 acres? Circle your answer: YES NO 4