Calculate the interest paid in the second year

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Reference no: EM131915811

Robert is considering the purchase of 80 acres of land South Texas for $3,256.38 per acre. A bank will loan him $3,030.00 per acre of land and the loan will be fully amortized over 12 years at 9%. The outstanding balance of loan will be paid at the end of the fifth year. Assume that the marginal tax rate is 14% and the inflation rate is 3%.

Calculate the loan payment.

a. $423 b. $578

c. $272 d. None of the answers are correct

Calculate the interest paid in the second year.

a. $259 b. $244

c. $272 d. None of the answers are correct

Calculate the tax savings from interest payments in the first year.

a. $36 b. $38.18

c. $34 d. None of the answers are correct

Calculate the loan balance at the end of the second year.

a. $2,879 b. $2,536.84

c. $2,715 d. None of the answers are correct

Reference no: EM131915811

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