At the beginning of last year, a farmer had an outstanding loan of $100,000. The interest rate was 10% APR. If the farmer made one loan payment at the end of the year of $25,400 what was the outstanding balance at the end of the year.

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Study for the FFA Farm Business Management Contest Exam. Prepare with versatile practice questions, flashcards, and in-depth explanations. Boost your readiness for success!

Multiple Choice

At the beginning of last year, a farmer had an outstanding loan of $100,000. The interest rate was 10% APR. If the farmer made one loan payment at the end of the year of $25,400 what was the outstanding balance at the end of the year.

Interest accrues on the outstanding balance, then payments reduce it. Start with 100,000 and apply 10% interest for the year, which adds 10,000, bringing the balance to 110,000. The year-end payment of 25,400 reduces this to 110,000 − 25,400 = 84,600. So the outstanding balance at year-end is 84,600. The other numbers would result from different payment amounts or not applying the payment after interest.

At the beginning of last year, a farmer had an outstanding loan of $100,000. The interest rate was 10% APR. If the farmer made one loan payment at the end of the year of $25,400 what was the outstanding balance at the end of the year.

Study for the FFA Farm Business Management Contest Exam. Prepare with versatile practice questions, flashcards, and in-depth explanations. Boost your readiness for success!

At the beginning of last year, a farmer had an outstanding loan of $100,000. The interest rate was 10% APR. If the farmer made one loan payment at the end of the year of $25,400 what was the outstanding balance at the end of the year.

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