Question

1. Brenda and Matt borrowed $40,000 from the Farm Service Agency for spring crop inputs, at 8% annual interest rate. They took out the loan on March 1 and paid it back on December 10, 285 days later. How much did they have to repay? Principal Interest TotalS 2. They also borrowed $12,000 from Farm Credit Services to buy some sows. They agreed to pay it back with 3 annual payments, plus 8% interest on the remaining loan balance. If the loan is amortized under the equal principal payment plan, how much did they have to pay each time? Assume the first payment is exactly one year after the loan is received, and the other two payments are exactly one year apart. Principal Interest Total Payment Balanss Remaining 1"payment 20 payment 3"payment Total 3. How much would their payments be if they were amortized under the equal total payment plan? The amortization factor for a 3-period loan at 8% interest is 388. Total Payment Interest Principal Balance Remaining 1"payment 20 payment 3"payment Total 4. Matt and Brenda were afraid that the payments the first two years would be two high for them. They arranged a balloon payment loan, with $2,000 principal due each of the first two years, and the remaining $8,000 due the last year. How much would their payments be under this plan? Principal Interest Total Payment Ralance Remaining 1' payment 20 payment 3"payment Total

Answer 1

Answer $ 40,000 principal loan Amoung) Interest ade 40,0008A00* 285/360 Interest 2533.33 So, poinciple 40,000 $2533.33 Interst Total * 42,533,33 40000 $ 2533.33 Table under Eatual princpal payment plan Baulounce Remeiningj principel "Totalpeuymat Tntered &৪%, 960 paymen Pey me 4000 8000 4460 640 4000 4-640 4000 4000 Pey meat 43R O O Total 120 २,०00 13920 12000 onowed numloer of yea of pomeut 3 tua! rincipal pejmut pleun - 12000/3$400 in each Pey met Intergt o0ox 7. 640 4000 8 : 320 $19a0

Table eafual total peyments plan under Jnderst Tot Amaunt pdinciple amend Balance remeiing peyment 8 303 4656 'peymena 4656 349 4311 3d 344 pay meud 4656 4-31 2 1२००০ tOTa 13,68 runt Borowed 12000 87 Irderest yat motzaion factor given in auesien 388 в 12000 * о388 44 656 evesy prcd Рeuymend wiье und es balloon peymerds Table plen principal Tota tmemt ndeset Balane pam 2960 2000 l,o0o paymed 2000 2800 B000 640 реyтакт a400 14, 400