AGEC 330 TEST QUESTIONS WITH
CORRECT ANSWES 2025/2026
Question 1 16..7 pts
Land's basic properties over time.
changes
Correct! remains constant
none of the above
Question 2 16..7 pts
Joan wants to buy land to expand her farm. She estimates one property would generate $780
per acre in crop sales while costing $505 per acre in operating costs. If the real expected rate of
return is 11.90%, calculate the estimated land value per acre.
$3,121
$3,272
Correct! $2,311 Solution: (780 - 508)/.1190 = 2,310.92
$2,423
None of the above
Question 3 16..7 pts
Land has specified legal description, with ownership recorded by local governments for taxation
and other controls.
True
Correct! False
Question 4 16..7 pts
,Land is a durable, immobile resource. With proper maintenance, land's basic properties do not
change over time, or if they do change, they change so slowly that land is considered to have an
infinite life.
Correct! True
False
Question 5
Suppose a farmer is considering the purchase of additional farmland. It is believed that the
operating revenue per acre of land per year will be $760 and operating expenses will be $514 in
present dollars. The inflation rate is expected to be 8% Assume that the marginal tax rate is 16%
and that this farmer requires at least an 8% pre-tax, risk free return on capital.
(i) Calculate the nominal before-tax net returns at the end of year 1.
a.
$308.19
b.
$265.68
c.
$246.00
d.
$244.43
e. None of the answers are correct
Enter Response Here:
(ii) Calculate the nominal after-tax net returns at the end of year 2.
a.
$279.59
, b.
$221.74
c.
$241.02
d.
$223.17
e. None of the answers are correct
Enter Response Here:
(iii) Calculate the nominal after-tax net returns at the end of year 3.
a.
$241.02
b.
$260.31
c.
$239.48
d.
$301.96
e. None of the answers are correct
Enter Response Here:
Answer 1:Correct!b
Answer 2:Correct!c
Answe
Question pts
CORRECT ANSWES 2025/2026
Question 1 16..7 pts
Land's basic properties over time.
changes
Correct! remains constant
none of the above
Question 2 16..7 pts
Joan wants to buy land to expand her farm. She estimates one property would generate $780
per acre in crop sales while costing $505 per acre in operating costs. If the real expected rate of
return is 11.90%, calculate the estimated land value per acre.
$3,121
$3,272
Correct! $2,311 Solution: (780 - 508)/.1190 = 2,310.92
$2,423
None of the above
Question 3 16..7 pts
Land has specified legal description, with ownership recorded by local governments for taxation
and other controls.
True
Correct! False
Question 4 16..7 pts
,Land is a durable, immobile resource. With proper maintenance, land's basic properties do not
change over time, or if they do change, they change so slowly that land is considered to have an
infinite life.
Correct! True
False
Question 5
Suppose a farmer is considering the purchase of additional farmland. It is believed that the
operating revenue per acre of land per year will be $760 and operating expenses will be $514 in
present dollars. The inflation rate is expected to be 8% Assume that the marginal tax rate is 16%
and that this farmer requires at least an 8% pre-tax, risk free return on capital.
(i) Calculate the nominal before-tax net returns at the end of year 1.
a.
$308.19
b.
$265.68
c.
$246.00
d.
$244.43
e. None of the answers are correct
Enter Response Here:
(ii) Calculate the nominal after-tax net returns at the end of year 2.
a.
$279.59
, b.
$221.74
c.
$241.02
d.
$223.17
e. None of the answers are correct
Enter Response Here:
(iii) Calculate the nominal after-tax net returns at the end of year 3.
a.
$241.02
b.
$260.31
c.
$239.48
d.
$301.96
e. None of the answers are correct
Enter Response Here:
Answer 1:Correct!b
Answer 2:Correct!c
Answe
Question pts
