In response to changing regulations and consumer preferences, an egg producer is planning to construct new cage-free egg facility. To finance the expansion, they would take out a $3.5 million loan with an interest rate of 3.5%, fully amortized over 10 years.

(i)What would be the annual loan payment? a.$420,845 b.$355,639 c.$356,539 d.$122,500

(ii)What would be the interest payment for year 2? a.$122,500 b.$308,440 c.$112,058 d.$420,845

(iii)What would be the tax savings from interest in year 2 if the marginal tax rate is 30%? a.$112,600 b.$37,650 c.$36,750 d.$33,617

(iv)What is the remaining principal after year 2? a.$3,201,655 b.$2,892,868 c.$2,573,274 d. $308,787