Question: 1. Total assets end of the year - $200.000, Net Farm Income = $23.000, Interest Expense -SI 5.000, and Leverage ratio =1.5
Calculate owner equity
Calculate Liabilities
Calculate the rate of return on equity and the cost of farm debt
What is the absolute return to assets and the rate of return to assets?
2. Farm assets = $1.200,000. and the cost of debt 7.75%. The fanner's initial investment in the farm was $200,000, and since then the farm has generated $50,000 in accumulated profits. What are the ROE and the ROA during the period since the farmer's initial investment? What is the fanner's interest expense?