# Draw the revenue matrix for Farmer Fickell assuming

## Draw the revenue matrix for Farmer Fickell assuming

Farmer Fickell farms 500 acres of corn. He has working capital of \$100,000, and a total cash flow need per year of \$350,000. His APH is 180 bu./acre, and a bad year for him is 140 bu/acre, whereas a good year is 200bu/acre. The planting time price is \$5/bushel for corn. If the US has a bad year, then average harvest prices will be \$7.25/bushel. If the US has a good year, average harvest prices will be \$3.50 per bushel.Draw the revenue matrix for Farmer Fickell assuming that he sells all of his production at harvest. Circle the revenue in each scenario.What is Farmer Fickell’s worst-case scenario? How much would he lose?If the probability of a poor/poor and a good/good year is each 40% and the probability of a poor/good and good/poor year is each 10%, then what is the expected revenue for Farmer Fickell?Recalculate Farmer Fickell’s revenue matrix to show what would hap- pen if he forward contracts 50 bushels of corn at planting. What does this do to his maximum revenue? What does it do to his minimum revenue?Assume that Fickell has the chance to buy 75% RA insurance for \$40/acre. Draw the matrix with only the insurance. Calculate the minimum and expected revenue.

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