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
icon
Related questions
Question

Question 2 

Full explain this question and text typing work only thanks

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:
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:
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education