NATIONAL OPEN UNIVERSITY OF NIGERIA
University Village, Nnamdi Azikiwe Expressway, Plot 91, Cadastral Zone, Jabi, Abuja Faculty of Agricultural Sciences,
Dept. of Agricultural Economics and Extension, 2020_2 Examination 1234
Programme: Agricultural Extension and Management
Course Code: AEA 302
Course Title: Agricultural Finance Credit Unit: 3
Total Score: 70 Marks Time Allowed: 3 Hours
Instruction: Answer compulsory question one (1) (30 marks) and any other four (4) Questions (10marks each)
1ai. What is the principal that will amount to N32, 220.00 in 5 years at 10%? Given the formula: A = P (1 + r)n
Where A = N32, 220
n = 5 years
r = 10% (4marks)
aii. What will be the amount receivable if a farmer invested N10, 000.00 on a farm implement for 5 years at 10% compound interest? (6marks)
b. At what rate of interest will N10, 000.00 take to become N16, 110.00, if the number of years for investment were 5 years? (10marks)
c. Financial intermediaries in agricultural finance are essential in promoting agricultural production. Assuming this claim is true; establish ten (10) cases why it is necessary to have financial intermediaries in agricultural finance (10marks)
2. Economic principles are the basic tools in which farm financial management rely upon. Quantify this statement using ten (10) cases (10marks).
3. Discuss using ten (10) instances the nature of agricultural finance (10marks).
4. Establish using ten (10) instances the relationship between production and consumption types of credit
5. Write short notes on the following
a. Payback Period (4marks)
b. Present Value (PV) method (4marks)
c. Internal Rate of Return (IRR) (2marks)
6. Identify and discuss the importance of credit to the farmer and the farm business (10marks).
7. You have been elected as the President Nigeria Labour Congress in your state; your state government is planning to subsidize credit and inputs in agriculture which you consider as not being a good policy. With six (6) instances itemize your point of view to establish your case against the implementation of the policy (10marks).