Ramsay is considering the purchase of 310 acres of land for $2,230.72 per acre in Galveston. A bank will loan Ramsay $2,000 per acre of land and the loan will be fully amortized over 22 years at 15% (annual payments). The outstanding balance of loan will be paid at the end of the third year. Assume that the marginal tax rate is 18%. Suppose that the following information is given:

(Net cash flow on a per acre basis)

Net Cash Flow before debt in Year 1= $254.00

Net Cash Flow before debt in Year 2= $169.00

Net Cash Flow before debt in Year 3= $2,403.00

(i) How much down payment is needed to purchase the 310 acres?

a. $67,446 b. $58,648

c. $71,523 d. $81,662

e. None of the answers are correct

Enter Response Here:

(ii) Calculate the amount of loan payment per acre per period.

a. $370 b. $267

c. $257 d. $314

e. None of the answers are correct

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(iii) Calculate the per acre tax savings from paying the interest in Year 2.

a. $30 b. $29

c. $23 d. $53.61

e. None of the answers are correct

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(iv) How much money needs to be generated from other parts of the business to cover the cash deficit for the 310 acres in the 1^st year, so that the investment is financially feasible?

a. $11,212 b. $2,024

c. $7,791 d. $10,927

e. None of the answers are correct

Enter Response Here:

(v) How much money needs to be generated from other parts of the business to cover the cash deficit for the 310 acres in the 2^nd year, so that the investment is financially feasible?

a. $36,912 b. $28,495

c. $30,267 d. $42,449

e. None of the answers are correct

Enter Response Here:

please explain answers