A farm can finance a tractor purchase with an $90,000 loan at the local bank. The...

A farm can finance a tractor purchase with an $90,000 loan at the local bank. The financing terms include a four-year loan, a 7.5% annual interest rate, and equal quarterly repayments of principal and interest. Given this information, determine the level of the quarterly payments.

Expert Solution

Rahul Sunny answered 2 years ago

You take out a car loan at your local bank for the purchase of a new...

You take out a car loan at your local bank for the purchase of a new car. The total cost including taxes and preparation costs are: $25,985. Your bank’s nominal interest rate for car loans is at the moment 7 1⁄4 % for a 5-year amortization period. Calculate your monthly payments and the remaining balance after 3 years.

Five years ago, Diane secured a bank loan of $390,000 to help finance the purchase of...

Five years ago, Diane secured a bank loan of $390,000 to help finance the purchase of a loft in the San Francisco Bay area. The term of the mortgage was 30 years, and the interest rate was 8%/year compounded monthly on the unpaid balance. Because the interest rate for a conventional 30-year home mortgage has now dropped to 6.5%/year compounded monthly, Diane is thinking of refinancing her property. (Round your answers to the nearest cent.) (a) What is Diane's current...

The MacDonalds are at the bank in order to negotiate a loan to buy a farm...

The MacDonalds are at the bank in order to negotiate a loan to buy a farm where they can raise cows, horses, chickens sheep and plant spaghetti trees. They have managed to save $400,000 over the last 10 years that they can use as a down payment. The MacDonalds would like to finance their purchase over 25 years making monthly payments. According to their financial planning schedule, they will clear $7,500 a month and would like their mortgage payments to...

b. Ben took up a loan to purchase a farm machine. The terms of his loan...

b. Ben took up a loan to purchase a farm machine. The terms of his loan require him to make quarterly payments of $3,434 over 7 years. The relevant rate of interest is 7.2% per year, compounded quarterly. For the same amount of loan and interest rate, will Ben pay off the loan sooner if he makes quarterly payments of $3,876 instead? Show all relevant calculations to support your answer.

A farm purchased a new tractor for $30,000. They estimated the tractor would have a useful...

A farm purchased a new tractor for $30,000. They estimated the tractor would have a useful life of 5 years and would have a salvage value of $5,000. The farm uses the straight-line method and the half-year convention. The farm sold the tractor during year 3 for $19,000. 1. Compute the amount of depreciation expense to be taken in years 1, 2 and 3 Year 1 Year 2 Year 3 2. Prepare a journal entry to record the sale of...

Suppose a bank makes a loan to a small business so that business can purchase a...

Suppose a bank makes a loan to a small business so that business can purchase a new machine press. Which of the following are true of that event--that is, of the bank lending to the business? (you can choose multiple answers) a. The business takes on a liability in the form of the loan agreement (the business' promise to repay the loan) b. The bank becomes more liquid c. The bank holds an asset in the form of the checking...

A tractor for over-the-road hauling is to be purchased by AgriGrow for $90,000. It is expected...

A tractor for over-the-road hauling is to be purchased by AgriGrow for $90,000. It is expected to be of use to the company for 6 years, after which it will be salvaged for $4,000. Transportation cost savings are expected to be $170,000 per year; however, the cost of drivers is expected to be $70,000 per year, and operating expenses are expected to be $63,000 per year, including fuel, maintenance, insurance, and the like. The company’s marginal tax rate is 40...

A tractor for over-the-road hauling is purchased for $90,000. It is expected to be of use...

A tractor for over-the-road hauling is purchased for $90,000. It is expected to be of use to the company for 6 years, after which it will be salvaged for $4,000. Calculate the depreciation deduction and the unrecovered investment during each year of the tractor's life. Use double declining balance switching to straight line depreciation. Please show excel equations if excel is used!

a) Adam wants to purchase a car and finance his purchase with a 3 year loan...

a) Adam wants to purchase a car and finance his purchase with a 3 year loan at 5% interest. If he wants his payments to be $475 per month, how much can he finance with this loan? b) Bernard purchased a car and financed his purchase with a loan at 5% interest. His payments are $475 per month. If he has 3 years left on his loan, what is his remaining balance? c) Carlton purchased a car and took out...

On 1/1/X1, Tractor Co. sold a new combine to Jim’s U-Pick farm. The purchase agreement 8.4...

On 1/1/X1, Tractor Co. sold a new combine to Jim’s U-Pick farm. The purchase agreement 8.4 establishes a base price of $100,000, plus a contractual interest rate of 5%, payable in 48 monthly installments of $2,302.93. Control of the combine transferred to Jim when Jim signed the contract and had the combine delivered that same day. If Jim had obtained separate financing (say, a bank loan) for the purchase, his interest rate would have been 6%. What amount of revenue...

Question