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Farm Management 2011 District Study Guide
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Gravity
Farm Management Multiple Choice Test
Terms in this set (40)
How many total acres are included in the "S 1/2 of the NE 1/4 of
the SE 1/4 and the N 1/2
of the SE 1/4 of the SE 1/4 of Section 15, Twp. 10N, R4W of the 5th Principle Meridian"?
40 acres
How much perimeter fence would be required to completely enclose the parcel of land
described in the question above?
1.0 mile
A township is six miles square and includes
36 sections.
What is the difference between a joint tenant and a tenancy in common?
the surviving joint tenant will eventually own all of the land as a result of right
of survivorship.
Cooperatives pay patronage refunds according to
amount of business done by patron.
A producer is thinking about storing his corn in the local elevator for 5 months. The price
at harvest is $5.20 per bushel and the elevator charges 2 cents per bushel per month for
storage plus a 5 cent per bushel handling charge. He has 5,000 bushels to sell and would
need to borrow $30,000 at 6% annual interest while he stores the corn. What price must
he receive for his corn to break even and cover his storage and opportunity costs?
$5.48
Corn has an expected yield of 150 bushels per acre and a production cost of $350.00 per
acre. Expected market prices are $5.40 per bushel for corn and $13.00 per bushel for
soybeans. Soybeans can be raised at a production cost of $150 per acre. At what
breakeven yield per acre would soybeans generate the same net return per acre as corn?
46.9 bushels
If high oil corn has the same production cost per acre as regular corn but can be sold for
15 cents per bushel more, what yield of high oil corn is needed to equal 155 bushels of
regular corn at $5.40 per bushel?
150.8 bushels
How many pounds of 48% protein soybean meal must be mixed with 11% protein wheat
to make a ton of 17% protein feed?
324 pounds
Due to a sharp increase in hog numbers, average hog prices were much lower in 2008
than in 2007. Demand for corn to feed to hogs _____________ in 2008 compared to
2007.
increased.
The Pig Palace Custom Feedlot purchased a group of weaner pigs weighing 12 pounds
each and sold them weighing 270 pounds after feeding them for 175 days. Each pig ate
760 pounds of feed during the feeding period. Average daily gain for each pig in the
group during the feeding period was
1.47 pounds per day
A farmer purchases 600-pound feeder steers for $1.20 per pound and plans to sell the
steers at 750 pounds. The farmer estimates the total cost of gain to be 80 cents per pound.
The nearest breakeven price when the steers are sold at 750 pounds is
$1.12/pound
A feedlot operator purchases a pen of 115 feeder steers with an average weight of 780
pounds and sells them at an average weight of 1280 pounds. Total feed cost for the pen is
$45,500. Feed cost per pound of gain is equal to
$0.791
A producer sells 8 feeder steers for $124/cwt. The average weight per steer is 752
pounds. There is a 2% sales commission and yardage fees of $3.10 per head. The net
amount received for the pen of steers would be
$7,285.84
A farmer is purchasing a new baler at a cost of $32,000. His dealer will finance the baler
under the following terms: 20% down payment with the balance repaid in equal
payments over the next 6 years at 7% APR. The farmer expects the baler to last for 8
years and have a salvage value of $6,000. How much interest will the farmer pay the first
year of the loan?
$1,792
A charge for capital used in a farmer's cattle herd is usually included in an enterprise
budget regardless of whether he borrowed money to buy the cows or not. This illustrates
the principle of
opportunity cost.
A feedlot operator buys feeder steers, finishes them, and sells them. The operator
estimates that finished steers will sell for $97 per cwt. and that it will cost $270 per head
to bring them from the 750 pound purchase weight to the 1100 pound selling weight.
What is the highest price the operator can pay for 750 pound feeder steers to break even?
$106.27/cwt.
On March 1, 2010, Anna borrowed $5,000 to buy bedding plants. On September 1, 2010,
she repaid the $5,000 along with $162.50 interest. What annual interest rate did she pay?
6.5%
A farmer began the year with an outstanding balance of $50,000 on his operating loan and
accrued interest of $3,000 on the loan. The loan carries an interest rate of 7% on
outstanding principal. Six months later he makes a $4,000 payment on the loan. After
this payment he will have an accrued interest of
$750
If the interest rate is 6%, what is the present value of a dollar to be received by a producer
two years from now?
$0.890
For tax year 2010, the social security wage base was
$106,800
For an individual under age 50, the maximum allowable IRA contribution and deduction
in 2010 was
$5,000
The present value formula for estimating land prices (PV = annual net returns ÷ discount
rate) assumes
All of the above
The type of life insurance which provides protection for a limited time and is usually
cheaper per dollar of protection is called
term
The net business profit for a year would be found on
the income statement
The turnover ratio is calculated by dividing __________ by average total assets.
value of farm production
In 2010, Paul Pigraiser had a net farm income of $40,000. Paul had total business assets
of $500,000 and total liabilities of $250,000. Paul paid $25,000 in interest. Return on
equity for 2010 would be
16%
A farmer is "liquid" if
he has sufficient current assets to cover current debts
Increasing leverage during a period when a farm's percent return to total capital is less
than the interest rate will mean
lower returns to equity
A constant payment loan with payments consisting of principal and interest is called
an amortized loan
The "rule of 72" says to divide 72 by the annual interest rate to estimate the number of
years needed for an initial investment earning that rate to double. How long would it take
for $5 earning 6% a year to grow to $20?
24 years
If the price of a commodity increases by 5% and the quantity purchased decreases by
10%, then the demand for this commodity is
elastic
Changes in price within a year which tend to follow the same pattern over time are called
price seasonality
A marketing function which tends to regulate the supply of a product and provide a stable
market price is
storing
Which one of the following would cause an increase in the price of an agricultural
commodity?
a decrease in supply with no change in demand
If the price of a commodity is too high, the supply will be greater than the demand
resulting in a
surplus
A trader with a short position in the futures market
profits when prices go down; loses when prices go up
The main reason for hedging is
to reduce the price risk associated with producing or storing a cash commodity.
A farmer who buys feeder pigs could use the options market to reduce his price risk by
buying a hog Put option
If a farmer purchased land for $160,000, has a loan of $100,000 remaining on the land,
and the market value of the land is $200,000, the book value of the land on the balance
sheet will be
$160,000 less any accumulates depreciation
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