A farmer is considering borrowing money from a bank. Given the following information: Initial loan amount is $88,000. The loan will be fully amortized in 3 years at 12%. Marginal tax rate is 20%.

(i) What is the total interest payment for this loan?

a. $25,514.24 b. $26,413.77

c. $18,318.02 d. $21,916.13

(ii) What is the total amount of tax savings from interest on this loan?

a. $4,383.23 b. $5,382.58

c. $3, 593.60 d. None of the answers are correct