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Question 5 In response to changing regulations and consumer preferences, an egg producer is planning to construct new cage-free egg facility. To finance the expansion,
Question 5 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 $4.2 million Ioan with an interest rate of 4.25%, fully amortized over 10 years. (i) What would be the annual loan payment? a. $178,500 b. $524,287 c. $345,786 d. $618,286 ENTER RESPONSE HERE: (ii)What would be the interest payment for year 2 ? a. $132,511 b. $178,500 c. $163,804 d. $175,800 ENTER RESPONSE HERE: (iii)What would be the tax savings from interest in year 2 if the marginal tax rate is 35% ? a. $84,255 b. $62,475 c. $34,540 d. $57,331 ENTER RESPONSE HERE: (iv)What is the remaining principal after year 2? a. $3,493,731 b. $360,489 c. $345,786 d. $3,854,213 ENTER RESPONSE HERE
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