1. The following table presents some data from I.M. Farmer's income statement. Use theinformation to compute values for each of the items listed below.+Total revenueNet farm incomeAverage net worthAverage asset valueInterest expensea. Rate of Rate of return on assetsb. Rate of return on equity_C. Return to family labor_$120,000 Total operating expenses$36,000Opportunity cost of labor$180,000 opportunity cost of management$360,000 Opportunity cost of capital$12,000d. Return to management_%%e. Assess the profitability of I.M. Farmer's business, and explain your answer.$72,000$20,000$5,00012%

Rate of return on assets:-The company profitability in relation to its total assets is determined by…

1. The following table presents some data from I.M. Farmer's income statement. Use the information to compute values for each of the items listed below. Total revenue Net farm income Average net worth Average asset value Interest expense $120,000 Total operating expenses $36,000 Opportunity cost of labor $180,000 opportunity cost of management $360,000 Opportunity cost of capital $12,000 a. Rate of Rate of return on assets b. Rate of return on equity_ % % $72,000 $20,000 $5,000 12% 0

1. The following table presents some data from I.M. Farmer's income statement. Use the information to compute values for each of the items listed below. Total revenue Net farm income Average net worth Average asset value Interest expense $120,000 Total operating expenses $36,000 Opportunity cost of labor $180,000 opportunity cost of management $360,000 Opportunity cost of capital $12,000 a. Rate of Rate of return on assets b. Rate of return on equity_ % % $72,000 $20,000 $5,000 12% 0

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

1. The following table presents some data from I.M. Farmer's income statement. Use the
information to compute values for each of the items listed below.
+
Total revenue
Net farm income
Average net worth
Average asset value
Interest expense
a. Rate of Rate of return on assets
b. Rate of return on equity_
C. Return to family labor_
$120,000 Total operating expenses
$36,000
Opportunity cost of labor
$180,000 opportunity cost of management
$360,000 Opportunity cost of capital
$12,000
d. Return to management_
%
%
e. Assess the profitability of I.M. Farmer's business, and explain your answer.
$72,000
$20,000
$5,000
12%

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