AGBM 106 Exam 2 || 100% Accurate Answers.
The higher the current ratio the more liquid the business. (T/F) correct answers True
A constant payment loan is negotiated. The loan is for $100,000, the annual interest rate is 10%.
The loan is for 10 years with one payment per year. What is the annual payment on this loan?
A. $1,321.51
B. $16,274.54
C. $10,000
D. $100,000
E. $15,255.34 correct answers B. $16,274.54
=PMT(rate, nper, pv)
Where:
rate = Annual Interest Rate (as a decimal)
nper = Number of Payments
pv = Loan Amount
For the given loan, the Excel formula would be:
=PMT(0.1, 10, 100000)
A constant payment loan is negotiated. The loan is for $100,000, the annual interest rate is 10%.
The loan is for 10 years with 12 payments per year. What is the monthly payment on this loan?
A. $16,274.54
B. $15,324.34
C. $1,321.51
D. $100,000 correct answers C. $1,321.51
=PMT(rate/12, nper*12, pv)
Where:
rate = Annual Interest Rate (as a decimal)
nper = Number of Payments
pv = Loan Amount
Plugging in the given values, we get:
=PMT(0.1/12, 10*12, 100000)
Imagine it is 12/31/2025 and a farm is completing its 2025 balance sheet. What is the farm's
current portion of term debt?
A. The total amount to be paid (interest + principal) on long term loans in 2025
, B. the amount of principal to be paid on long term loans in 2026
C. the amount of principal to be paid on long term loans in 2025
D. the total amount to be paid (interest + principal) on long term loans in 2026 correct answers
B. The amount of principal to be paid on long term loans in 2026
The higher the debt to asset ratio the more solvent the farm. (T/F) correct answers False
A dairy cow is purchased for $2,000. Assume the cow is considered a 5 year asset and has a
salvage value of $500. What is the cost value of the cow at the end of year 3?
A. $11,400
B. $1,100
C. $2,000
D. $1,500 correct answers B. $1,100
The annual depreciation amount is (2000-500)/5 = $300 per year.
Thus after 3 years the cow is worth 2000 - 3*300 = $1100.
(Cost - Salvage value) / # year asset = $ per year
Cost - end of year # * depreciation amt = $ cost value
A farm has total A of $100 and total D of $60. What is owner equity?
A. 40
B. $100
C. $60
D. -$40 correct answers A. $40
A = D + E, E = A - D....100-60 = $40
A farm has total A of $100 and total D of $60. What is the debt to asset ratio?
A. 0.40
B. 100
C. 1.60
D. 0.60 correct answers D. 0.60
Debt to asset ratio = D / A = = 0.6
A farm truck is purchased for $50,000. Assume the truck is a 5 year asset and has a salvage value
of $10,000. What is the annual depreciation expense of this truck?
A. $50,000
B. $12,000
C. $8,000
D. $10,000 correct answers C. $8,000
Annual depreciation expense = (50000-10000)/5= $8,000.
The higher the current ratio the more liquid the business. (T/F) correct answers True
A constant payment loan is negotiated. The loan is for $100,000, the annual interest rate is 10%.
The loan is for 10 years with one payment per year. What is the annual payment on this loan?
A. $1,321.51
B. $16,274.54
C. $10,000
D. $100,000
E. $15,255.34 correct answers B. $16,274.54
=PMT(rate, nper, pv)
Where:
rate = Annual Interest Rate (as a decimal)
nper = Number of Payments
pv = Loan Amount
For the given loan, the Excel formula would be:
=PMT(0.1, 10, 100000)
A constant payment loan is negotiated. The loan is for $100,000, the annual interest rate is 10%.
The loan is for 10 years with 12 payments per year. What is the monthly payment on this loan?
A. $16,274.54
B. $15,324.34
C. $1,321.51
D. $100,000 correct answers C. $1,321.51
=PMT(rate/12, nper*12, pv)
Where:
rate = Annual Interest Rate (as a decimal)
nper = Number of Payments
pv = Loan Amount
Plugging in the given values, we get:
=PMT(0.1/12, 10*12, 100000)
Imagine it is 12/31/2025 and a farm is completing its 2025 balance sheet. What is the farm's
current portion of term debt?
A. The total amount to be paid (interest + principal) on long term loans in 2025
, B. the amount of principal to be paid on long term loans in 2026
C. the amount of principal to be paid on long term loans in 2025
D. the total amount to be paid (interest + principal) on long term loans in 2026 correct answers
B. The amount of principal to be paid on long term loans in 2026
The higher the debt to asset ratio the more solvent the farm. (T/F) correct answers False
A dairy cow is purchased for $2,000. Assume the cow is considered a 5 year asset and has a
salvage value of $500. What is the cost value of the cow at the end of year 3?
A. $11,400
B. $1,100
C. $2,000
D. $1,500 correct answers B. $1,100
The annual depreciation amount is (2000-500)/5 = $300 per year.
Thus after 3 years the cow is worth 2000 - 3*300 = $1100.
(Cost - Salvage value) / # year asset = $ per year
Cost - end of year # * depreciation amt = $ cost value
A farm has total A of $100 and total D of $60. What is owner equity?
A. 40
B. $100
C. $60
D. -$40 correct answers A. $40
A = D + E, E = A - D....100-60 = $40
A farm has total A of $100 and total D of $60. What is the debt to asset ratio?
A. 0.40
B. 100
C. 1.60
D. 0.60 correct answers D. 0.60
Debt to asset ratio = D / A = = 0.6
A farm truck is purchased for $50,000. Assume the truck is a 5 year asset and has a salvage value
of $10,000. What is the annual depreciation expense of this truck?
A. $50,000
B. $12,000
C. $8,000
D. $10,000 correct answers C. $8,000
Annual depreciation expense = (50000-10000)/5= $8,000.
