The impact of selected credit terms on maximum feasible farm debt levels: a simulation study
1980
Thompson, J. | Hanson, G.
Extract: This report estimates how much debt nine farms typifying the Corn Belt region of southern Minnesota can handle. Data from farm management associations are analyzed with a regression technique to determine per enterprise rates of return, operating expense, and asset composition. Such estimates are used to simulate returns for specified one- and two-enterprise farms. Maximum feasible debt ratios for these units are estimated for both rigid and flexible default conditions for 1966 through 1975. Sensitivity tests are performed on the model to observe the effects of interest rate changes and mortgage term lengths on the debt-servicing capability of each farm type.
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