Question: A farmer needs to borrow $2,500. The local PCA will make a 2-year loan fully amortized at 12% with quarterly payments. A $10 dollar loan

A farmer needs to borrow $2,500. The local PCA will make a 2-year loan fully amortized at 12% with quarterly payments. A $10 dollar loan fee and stock purchase is required. There is a 4% stock requirement.

(i) What is the actuarial rate?

a. 15.2%b. 3.80%

c.12.55%d. None of the answers are correct

(ii) What is the APR?

a. 3.80%b. 15.2%

c. 12.55%d. None of the answers are correct

(iii) What is the effective rate?

a.15.2%b. 12.55%

c. 3.80%d. None of the answers are correct

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