A farmer is considering borrowing money from a bank. Given the following information : Initial loan amount is $95,000. • The loan will be fully amortized in 3 years at 12%. • Marginal tax rate is 25%. (i) What is the principal payment in the 1st year? b. $8,550.00 d. None of the answers are correct a. $21,114.86 c. $28,153.15 ENTER RESPONSE HERE: (ii) What is the principal payment in the 2nd year? a. $13,054.50 b. $31,531.53 c. $23,648.65 d. $25,288.29 ENTER RESPONSE HERE:
A farmer is considering borrowing money from a bank. Given the following information : Initial loan amount is $95,000. • The loan will be fully amortized in 3 years at 12%. • Marginal tax rate is 25%. (i) What is the principal payment in the 1st year? b. $8,550.00 d. None of the answers are correct a. $21,114.86 c. $28,153.15 ENTER RESPONSE HERE: (ii) What is the principal payment in the 2nd year? a. $13,054.50 b. $31,531.53 c. $23,648.65 d. $25,288.29 ENTER RESPONSE HERE:
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:A farmer is considering borrowing money from a bank. Given the following
information:
Initial loan amount is $95,000.
• The loan will be fully amortized in 3 years at 12%.
• Marginal tax rate is 25%.
(i) What is the principal payment in the 1st year?
b. $8,550.00
d. None of the answers are correct
a. $21,114.86
c. $28,153.15
ENTER RESPONSE HERE:
(ii) What is the principal payment in the 2nd year?
a.
$13,054.50
b. $31,531.53
c. $23,648.65
d. $25,288.29
ENTER RESPONSE HERE:
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