You have just bought (October 1) 450 head of 530 lb calves at the local sale barn for $310.05/cwt and are planning to place these cattle in a custom feedlot in Nebraska. After looking at the cattle you have estimated that the cattle will be ready for sale at 1500 lbs. You and the manager of the feedlot have estimated a feed conversion of 5.5, but you need to estimate intake and gain. The manager predicts a charge of $25.00 per head to cover processing and medicine charges. There will be $5 of misc costs estimated per head. The manager has told you that she will finance cattle and feed for you at a 6.5% interest rate, but you have to put up $300.00 per head. The manager also told you that feed will cost $193.80 per ton AF (diet DM is 66.0%) and yardage is $0.60 per day. 6.5 intrest -300 a) Calculate breakeven with 0% death loss. 12 points b) Calculate cost of gain. 7 points c) Re-calculate breakeven with 1.5% death loss. 12 points d) Calculate cost of gain with 1.5% death loss. 7 points e) Will these cattle make money if sold in June at a hedge price (futures) of $191 with an expected +3 basis (so price is $194/cwt on final sale weight)? Explain. 12 points

You have just bought (October 1) 450 head of 530lb calves at the local sale barn for $310.05/cwt and are planning to place these cattle in a custom feedlot in Nebraska. After looking at the cattle you have estimated that the cattle will be ready for sale at 1500lbs. You and the manager of the feedlot have estimated a feed conversion of 5.5, but you need to estimate intake and gain. The manager predicts a charge of $25.00 per head to cover processing and medicine charges. There will be $5 of misc costs estimated per head. The manager has told you that she will finance cattle and feed for you at a 6.5% interest rate, but you have to put up $300.00 per head. The manager also told you that feed will cost $193.80 per ton AF (diet DM is 66.0% ) and yardage is $0.60 per day. a) Calculate breakeven with 0% death loss. 12 points b) Calculate cost of gain. 7 points c) Re-calculate breakeven with 1.5% death loss. 12 points d) Calculate cost of gain with 1.5% death loss. 7 points e) Will these cattle make money if sold in June at a hedge price (futures) of \$191 with an expected +3 basis (so price is $194/ cwt on final sale weight)? Explain. 12 points