Question
Total assets end of the year (A)= $300,000, Net farm income (NFI)= $25,000, interest expense (Id) =$20,000, and leverage ratio (D/E) =0.5. A. Calculate owners
Total assets end of the year (A)= $300,000, Net farm income (NFI)= $25,000, interest expense (I’d) =$20,000, and leverage ratio (D/E) =0.5.
A. Calculate owners equity (E)
B. Calculate liabilities (D)
C. Calculate the rate of return on farm equity (ROFE) and the cost of farm debt (COFD)
D. What is the absolute return to assets (R) and the rate of return to farm assets
Step by Step Solution
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Step: 1
A To calculate owners equity E we use the formula E A D Given that the leverage rati...
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
