Question: A farmer is considering borrowing money from a bank. Given the following information: Initial loan amount is $52,000. The loan will be fully amortized in

A farmer is considering borrowing money from a bank. Given the following information: Initial loan amount is $52,000. The loan will be fully amortized in 3 years at 10%. Marginal tax rate is 15%.

(i) What is the loan balance at the end of 1^st year?

a. $38,646.53 b. $50,317.65

c. $36,290.03 d. None of the answers are correct

(ii) What is the loan balance at the end of 2^nd year?

a. $19,009.06 b. $23,957.70

c. $24,135.23 d. None of the answers are correct

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