Author Question: Jake is a corn farmer in Nebraska. He rents his land on a long-term lease for 250,000 a year. He ... (Read 100 times)

audragclark · **on:** Jun 29, 2018

Jake is a corn farmer in Nebraska. He rents his land on a long-term lease for 250,000 a year. He pays his farm hands 28,000 a year.

Is his rent a fixed cost or a variable cost? Are the wages he pays his workers a fixed cost or a variable cost? Briefly explain your answers.

Question 2

What is the present value of 1,000 to be received 2 years in the future with an interest rate of 8 percent?

A) 857.34
B) 925.93
C) 1080.00
D) 1166.40

kiamars2010 · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

Jake's rent is a fixed cost. He is renting his land on a long-term lease and so the land is a fixed factor. The wages Jake pays are a variable cost. Labor is a variable factor so the wages are a variable cost.

Answer to Question 2

A