II. Rather than developing an enterprise budget from scratch, it is oflen easier to begin with one developed by your State Cooperative Extension Service or some other source and modify it to fit your individual situation. Assume yoa are currently farming and have been given the oppottusity to rent an adjoining 300 acres where you woald grow only eom. You woold like to know if it would be profitable to rent this land. To help with your decision, you have acquired the attached enterprise bodpet for corn but fecl you must make the following changes for the budget to fit your situation. Use the right-hand column to calculate your modified corn enterprise budget. (If no change, use budget value) 1. Com price is expected to be $3.50 per bu. but you expect 95 bu. per acte. Notg yield change affects hauling costs. 2. Seed price is now $2.50 per thousand. 3. You ean now buy Nitrogen fertilizer for $0,40 per pound. Application cost is the same. 4. Weed control is now $35 per acre. 5. Truetor \& machinery variable costs shoald be 20% bieher than badget values. 6. You would like to make $12.00 per bour for your labor and your big machinery should reduce labor needs to .8 hours per acre. 7. Opportunity cost of your capital is 5%. 8. Machinery and tractor fixed costs should be only 85% of budget values. 9. You can rent the land for $40.00 per acre. 10. Custom combine now costs $22,50 per acre. QUESTIONS 1. Would you rent the land for $40.00 per acre? Why? Yes the net- re tum is thigher. 2. If the price of com turns out to be $3.50 per bu., what yield would be necessary to just cover all costs including your labor cost. (Ignore the change in hauling cost.) To caver all cost yield would need to be 95 busher eera 3. What is the maximum cash rent you could pay for this land (i.e. what cash rent would just make this a breakeven deal, i. e., no profit? $58.86perave 4. If you would be willing to receive only $8.00 per hour for your labor, what is the maximum cash rent you could pay and earn the $8.00 per hour? CORN