QUESTION 2

1. The total loan payment is constant over time for equal principal loans.

   True

   False

18 points

QUESTION 3

1. The principal payment for fully amortized loan is less than an equal principal loan at the beginning but later is greater, ceteris paribus.

   True

   False

18 points

QUESTION 4

1. A farmer is taking out a 30-year loan of $35,000 with equal principal annual payments and an interest rate of 10%. Inflation rate is expected to be 3% per year. What is the loan balance in the 6^th year?

   		$23,742
   		$38,321
   		$27,999
   		None of the answers are correct

18 points

QUESTION 5

1. A farmer is taking out a 20-year loan of $30,000 with equal principal annual payments and an interest rate of 12%. Growth rate of farm returns are expected to be 4% per year. What is the interest payment in the 5^th year?

   		$2,164
   		$2,880
   		$5,248
   		None of the answers are correct