Question

A farmer needs to borrow $1,500. The local PCA will make a 2-year loan fully amortized at 10% with annual payments. A $10 loan fee and stock purchase are required. There is a 2% stock requirement.

a) $30 annual payment
b) $1,470 loan amount
c) $30 stock purchase
d) $10 loan fee

Answer 1

This question involves calculating the details of a loan's financial terms, such as annual payments, loan amount, and other associated costs, given a 2-year period and a 10% interest rate.

Step-by-step explanation:

The question pertains to loan amortization, which is a common topic in finance-related mathematics. When a farmer needs to borrow $1,500 considering a 2-year loan at a 10% interest rate, annual payments, additional fees, and a stock purchase requirement, these details are essential in calculating the loan's annual payment and other financial implications.

To clarify, the student's question consists of multiple parts, and each part a) through d) refers to different components of the loan process like the annual payment (a), loan amount (b), stock purchase (c), and loan fee (d). The solution will involve calculating the loan payment, considering the 10% annual interest rate, amortization over 2 years, and subtracting any fees or requirements for stock purchases to determine the actual loan amount disbursed to the borrower.