A farmer is considering borrowing money from a bank. Given the following information:

Initial loan amount is $250,000.

The loan will be fully amortized in 3 years at 14%.

Marginal tax rate is 15%.

(i) What is the principal payment in the 1^st year?

a. $61,780.44 b. $54,208.66

c. $72,682.87 d. None of the answers are correct

(ii) What is the principal payment in the 2^nd year?

a. $65,910.60 b. $82,858.47

c. $8,294.83 d. None of the answers are correct