Assume you have purchased a 1⁄2 section of land for $800,000. You put $200,000
down and financed the remaining $600,000 at 8% annually over 20 years. Payments are to be made annually.
a. Calculate the total payment (outline principal and interest) that would be paid in the first year if the payment is determined using equal principal payments. (5 marks)
b. Calculate the total payment (outline principal and interest) that would be paid in the first year if the payment is determined using equal total payments. (5 marks)
c. Using equal total payments, calculate the total payment for the first payment if terms were adjusted to indicate that payments were to be made semi-annually. (3 marks)