Question

a. Mr. Peter borrowed money amounting to $10,000.00 from Captec bank to finance his
Livestock farming business. The Bank’s interest rate is at 24% with the loan to be
repaid in 4 years.
i. Calculate the loan repayment using Equal Total Payment Loan Principal method.
b. Given that Mr. Peter’s net operating income before depreciation of his farm building is $42,000 annually and the overall capitalization rate for this type of property is 13%. Calculate the value of his property?

Answer 1

Note:- In the question, payment period is not mentioned i.e; whether it is monthly or quaterly or annually. We assumed annual payment.