b) Prepare and submit via Turnitin a word document (800 words max) where you evaluate the effect of changes for the following scenarios: a. Cereal yields drop by 20% but prices are up by 10%. Contract charges are increased by 25% and variable costs for all enterprises increase by 2%. The discussion should focus to the following: . . profit cash flow the balance sheet . Farming Policy lan, a farmer's son, has been offered the opportunity of renting 70 hectares of permanent pasture and 505 hectares of arable land for one year at a cost of 185 per hectare. He plans to buy 400 strong ewe lambs which he will grow on over the summer on the pasture and sell as breeding stock. He intends to grow a crop of spring wheat on the arable land (295 ha) and spring malting barley (210 ha).lan has a pick-up truck of his own while, in the rent agreement there is included a storage building to use throughout the year. lan will be able to manage all of the work himself, but he has agreed to pay his father a nominal flat- rate contractor's fee for the use of his father's machinery and some manual assistance during the year. In addition, he will cover the costs of fuel and repair for the hours the machinery have been used in the farm Enterprise details I Spring wheat (295 ha) Drilled in March with a seed rate of 200 kg/ha. 232 kg/ha of a compound fertiliser (20:10:10) is incorporated in the seedbed. Costs of chemical spray (for mildew and rusts) amount to 151 per hectare in May. The expected yield is 6.1 tonnes per hectare. This will be sold in November. In addition, 3 tonnes per hectare of baled straw will be sold in September. Spring Malting Barley (210 ha) D Focus AP2A64 Budget_Builder_Assignment_202012) - Protected View - Saved to this PC- Chipo Shal out References Mailings Review View Help Internet can contain viruses. Unless you need to edit it's safer to stay in Protected View Enablo Editing Enterprise details Spring wheat (295 ha) Drilled in March with a seed rate of 200 kg/ha. 232 kg/ha of a compound fertiliser (20:10:10) is incorporated in the seedbed. Costs of chemical spray (for mildew and rusts) amount to 151 per hectare in May. The expected yield is 6.1 tonnes per hectare. This will be sold in November. In addition, 3 tonnes per hectare of baled straw will be sold in September Spring Malting Barley (210 ha) Drilled also in March with a seed rate of 175 kg per hectare. 105 kg/ha of a compound fertiliser (20:10:10) is incorporated in the seedbed. Costs of chemical spray amount to 151 per hectare in May. The expected yield is 5.7 tonnes per hectare. This will be sold in December Grassland (70 ha) Two fertiliser applications will be made, both will be of a 25:5:5 compound. The first application of 150 kg/ha will be made in March, the second application of 100 kg/ha will be made in May. Ewe lambs (400 head) I Budget Builder for Financial Planning 2020-2021 Academic Year 400 strong ewe lambs will be purchased in February and sold as breeding stock in August. Assume that there will be 5% casualties and that miscellaneous and veterinary and medicine costs will amount to 9 per head spread across the total head of lambs (payable in July). D Focus Chipo Shonengete AP2A64 Budget_Builder_Assignment_202012) Protected View - Saved to this PC- an Layout References Mailings Review View Help from the Internet can contain viruses. Unless you need to edit it's safer to stay in Protected View Enable Editing Budget Builder for Financial Planning 2020-2021 Academic Year 100 strong ewe lambs will be purchased in February and sold as breeding stock in August. Assume that there will be 5% casualties and that miscellaneous and veterinary and medicine costs will amount to 9 per head spread across the total head of lambs (payable in July). Price Information Seed Fertiliser Crop sales Spring Wheat Spring Barley 20:10:10 25:5:5 Spring Wheat grain Spring Wheat straw Spring Malting Barley grain Ewe lambs Breeding stock 440 per tonne 410 per tonne E276 per tonne 257 per tonne F160 per tonne E67 per tonne E158 per tonne 76 per head E114 per head Sheep prices Timing Assume that inputs are purchased when required and paid for immediately. Furthermore, assume that receipts occur when output is sold. The rent is payable in two instalments, one in June, one in December Fixed Costs General contracting lan has agreed to pay contractor fees to his father at the end of the year for the use of his father's machinery and some manual assistance during the year. They have agreed on the following charges Cultivation: Various operations 168/ha Drilling 50/ha Crilla ch focus AP2A64 Budget_Builder_Assignment_202002) - Protected View - Saved to this PC- References Mailings Review View Help Enable Editing t can contain viruses. Unless you need to edit it's safer to stay in Protected View December Fixed Costs General contracting lan has agreed to pay contractor fees to his father at the end of the year for the use of his father's machinery and some manual assistance during the year. They have agreed on the following charges: Cultivation: Various operations E68/ha Drilling 50/ha Fertilising and Spraying F12/ha Combining E90/ha Fuels and repairs Fuels and repairs cost are charged at 10.89 per hour, lan and his father have agreed that a total of 60 hours is required for the various cultivation operations, 120 hours for drilling, 130 hours combining and a total of 75 hours for both spraying and fertiliser application. Interest charges Interest on the bank overdraft is paid quarterly at an annual nominal rate of 5%. Assume that interest payable in a given quarter is calculated on the dosing balance in the previous quarter. Depreciation For the pick-up truck, the purchase price 6 years ago was 23,000, while the useful life of the pick-up truck is set to be at 12 years. Depreciation is estimated at 10% using a diminishing balance method For the storage building, the initial cost was 80,000, while 4 years after its written down value is 64,000. The useful life of the storage building is set to be at 20 years. Depreciation is estimated using a straight-line method AP2A64 Budget_Builder_Assignment_2020(2) - Protected View - Saved to this PC- References Mailings Review View Help net can contain virusus. Unless you need to edit, it's safer to stay in Protected View Enable Editing Budget Builder for Financial Planning 2020-2021 Academic Yea Cash Withdrawals Personal drawings lan has no plans to withdrawany money from the account he has opened for this business for his own personal expenses. Bank account lan has opened an account specifically for this venture. At the start of the year the balance was 4,000. Assume that there are no other assets or liabilities to consider for this example, and that lan neither receives nor gives any benefits in kind. Basic Payment Scheme fan will also be eligible for the Basic Payment Scheme (BPS), at E162 per hectare as announced from the Rural Payment Agency (RPA), which will be received in December. This is payable on both the 70 hectares of permanent pasture and 505 hectares of arable land. Combine harvester lan is considering investing in the purchase of a 6-metre-wide cutterbar, 270 hp Combine Harvester to replace custom hiring of 505 hectares of spring wheat and spring malting barley at 90 per hectare. The purchasing cost of the combine is 219,000. The combine has a useful life of 16 years and a salvage value of 42,000. The opportunity cost of capital is assumed to be 12.5% Annual taxes are estimated to be at E300 and insurance costs 650. Yearly variable costs are estimated at f2,500 for repairs, 2,890 for fuel and lubricants and 750 for labour. Assume for this case that the depreciation method to follow is that of the straight line. Would the investment in the combine be profitable? What is the net change in profit? What is the break even custom charge and land size respectively? b) Prepare and submit via Turnitin a word document (800 words max) where you evaluate the effect of changes for the following scenarios: a. Cereal yields drop by 20% but prices are up by 10%. Contract charges are increased by 25% and variable costs for all enterprises increase by 2%. The discussion should focus to the following: . . profit cash flow the balance sheet . Farming Policy lan, a farmer's son, has been offered the opportunity of renting 70 hectares of permanent pasture and 505 hectares of arable land for one year at a cost of 185 per hectare. He plans to buy 400 strong ewe lambs which he will grow on over the summer on the pasture and sell as breeding stock. He intends to grow a crop of spring wheat on the arable land (295 ha) and spring malting barley (210 ha).lan has a pick-up truck of his own while, in the rent agreement there is included a storage building to use throughout the year. lan will be able to manage all of the work himself, but he has agreed to pay his father a nominal flat- rate contractor's fee for the use of his father's machinery and some manual assistance during the year. In addition, he will cover the costs of fuel and repair for the hours the machinery have been used in the farm Enterprise details I Spring wheat (295 ha) Drilled in March with a seed rate of 200 kg/ha. 232 kg/ha of a compound fertiliser (20:10:10) is incorporated in the seedbed. Costs of chemical spray (for mildew and rusts) amount to 151 per hectare in May. The expected yield is 6.1 tonnes per hectare. This will be sold in November. In addition, 3 tonnes per hectare of baled straw will be sold in September. Spring Malting Barley (210 ha) D Focus AP2A64 Budget_Builder_Assignment_202012) - Protected View - Saved to this PC- Chipo Shal out References Mailings Review View Help Internet can contain viruses. Unless you need to edit it's safer to stay in Protected View Enablo Editing Enterprise details Spring wheat (295 ha) Drilled in March with a seed rate of 200 kg/ha. 232 kg/ha of a compound fertiliser (20:10:10) is incorporated in the seedbed. Costs of chemical spray (for mildew and rusts) amount to 151 per hectare in May. The expected yield is 6.1 tonnes per hectare. This will be sold in November. In addition, 3 tonnes per hectare of baled straw will be sold in September Spring Malting Barley (210 ha) Drilled also in March with a seed rate of 175 kg per hectare. 105 kg/ha of a compound fertiliser (20:10:10) is incorporated in the seedbed. Costs of chemical spray amount to 151 per hectare in May. The expected yield is 5.7 tonnes per hectare. This will be sold in December Grassland (70 ha) Two fertiliser applications will be made, both will be of a 25:5:5 compound. The first application of 150 kg/ha will be made in March, the second application of 100 kg/ha will be made in May. Ewe lambs (400 head) I Budget Builder for Financial Planning 2020-2021 Academic Year 400 strong ewe lambs will be purchased in February and sold as breeding stock in August. Assume that there will be 5% casualties and that miscellaneous and veterinary and medicine costs will amount to 9 per head spread across the total head of lambs (payable in July). D Focus Chipo Shonengete AP2A64 Budget_Builder_Assignment_202012) Protected View - Saved to this PC- an Layout References Mailings Review View Help from the Internet can contain viruses. Unless you need to edit it's safer to stay in Protected View Enable Editing Budget Builder for Financial Planning 2020-2021 Academic Year 100 strong ewe lambs will be purchased in February and sold as breeding stock in August. Assume that there will be 5% casualties and that miscellaneous and veterinary and medicine costs will amount to 9 per head spread across the total head of lambs (payable in July). Price Information Seed Fertiliser Crop sales Spring Wheat Spring Barley 20:10:10 25:5:5 Spring Wheat grain Spring Wheat straw Spring Malting Barley grain Ewe lambs Breeding stock 440 per tonne 410 per tonne E276 per tonne 257 per tonne F160 per tonne E67 per tonne E158 per tonne 76 per head E114 per head Sheep prices Timing Assume that inputs are purchased when required and paid for immediately. Furthermore, assume that receipts occur when output is sold. The rent is payable in two instalments, one in June, one in December Fixed Costs General contracting lan has agreed to pay contractor fees to his father at the end of the year for the use of his father's machinery and some manual assistance during the year. They have agreed on the following charges Cultivation: Various operations 168/ha Drilling 50/ha Crilla ch focus AP2A64 Budget_Builder_Assignment_202002) - Protected View - Saved to this PC- References Mailings Review View Help Enable Editing t can contain viruses. Unless you need to edit it's safer to stay in Protected View December Fixed Costs General contracting lan has agreed to pay contractor fees to his father at the end of the year for the use of his father's machinery and some manual assistance during the year. They have agreed on the following charges: Cultivation: Various operations E68/ha Drilling 50/ha Fertilising and Spraying F12/ha Combining E90/ha Fuels and repairs Fuels and repairs cost are charged at 10.89 per hour, lan and his father have agreed that a total of 60 hours is required for the various cultivation operations, 120 hours for drilling, 130 hours combining and a total of 75 hours for both spraying and fertiliser application. Interest charges Interest on the bank overdraft is paid quarterly at an annual nominal rate of 5%. Assume that interest payable in a given quarter is calculated on the dosing balance in the previous quarter. Depreciation For the pick-up truck, the purchase price 6 years ago was 23,000, while the useful life of the pick-up truck is set to be at 12 years. Depreciation is estimated at 10% using a diminishing balance method For the storage building, the initial cost was 80,000, while 4 years after its written down value is 64,000. The useful life of the storage building is set to be at 20 years. Depreciation is estimated using a straight-line method AP2A64 Budget_Builder_Assignment_2020(2) - Protected View - Saved to this PC- References Mailings Review View Help net can contain virusus. Unless you need to edit, it's safer to stay in Protected View Enable Editing Budget Builder for Financial Planning 2020-2021 Academic Yea Cash Withdrawals Personal drawings lan has no plans to withdrawany money from the account he has opened for this business for his own personal expenses. Bank account lan has opened an account specifically for this venture. At the start of the year the balance was 4,000. Assume that there are no other assets or liabilities to consider for this example, and that lan neither receives nor gives any benefits in kind. Basic Payment Scheme fan will also be eligible for the Basic Payment Scheme (BPS), at E162 per hectare as announced from the Rural Payment Agency (RPA), which will be received in December. This is payable on both the 70 hectares of permanent pasture and 505 hectares of arable land. Combine harvester lan is considering investing in the purchase of a 6-metre-wide cutterbar, 270 hp Combine Harvester to replace custom hiring of 505 hectares of spring wheat and spring malting barley at 90 per hectare. The purchasing cost of the combine is 219,000. The combine has a useful life of 16 years and a salvage value of 42,000. The opportunity cost of capital is assumed to be 12.5% Annual taxes are estimated to be at E300 and insurance costs 650. Yearly variable costs are estimated at f2,500 for repairs, 2,890 for fuel and lubricants and 750 for labour. Assume for this case that the depreciation method to follow is that of the straight line. Would the investment in the combine be profitable? What is the net change in profit? What is the break even custom charge and land size respectively