Review Notes AGEC 325 Spring 2009 EXAM 2 – Wed April 15

10 Enterprise budgeting 1. What an enterprise budget is and purposes for which it may be used 2. Parts and structure 3. Know how to do break-even analysis from an enterprise budget 4. Know how to use budgets to estimate maximum land rents, and “returns to ----” and “returns over ---”

11 Partial budgeting 1. What it is and purposes for which it is used 2. Components, organization, and structure 3. Be able to develop one for a simple problem

13 Cash flow budgeting 1. What it is 2. What it is used for 3. Structure

14 Forms of business organization A. Forms of business organization For each know something about the following: 1. Organization and characteristics 2. Advantages 3. Disadvantages

17 Investment analysis 1. Know the definitions, uses, and how to determine or calculate: Present value, Net present value, Internal rate of return, Discount rate, Financial feasibility, Economic feasibility 2. Know the role of time value, inflation, and risk in determining an appropriate discount rate.

Chapter 19 Capital and the Use of Credit –What is capital and what are its sources? What are th –What is capital and what are its sources? What are their relative importance? –What is credit? –Know what the cost of capital is –Know how to decide how much capital to use –Know what leverage is, how it is measured and what circumstances favor being highly leveraged. –Know how to describe advantages /disadvantages of different types of loans by length, use, security and repayment plan –Know the sources of loan funds and their relative importance for different types of loans Know what the cost of capital is –Know how to decide how much capital to use Chapter 19 Capital and the Use of Credit

Chapter 20 Land -- Control and Chapter 20 Land – Control and Use Use –Be able to explain important factors in land purchase decisions, methods of land valuation, and the legal aspects of a land purchase –Know the advantages and disadvantages of ownership, cash leasing and share leasing –Be able to demonstrate how an equitable share leasing arrangement can be developed