You have the chance to buy the neighbors farm for $500,000. You have a $100,000 down payment with the rest ($400,000) financed in one of the following ways.
Equal annual payments with an interest rate of 7% for 20 years.
Equal annual payments with an interest rate of 10% for 15 years.
Equal quarterly payments with an interest rate of 8% for 15 years.
Your neighbor will carry the contract.
1) Calculate each of the loans payment and the total payment amounts
2) Which is the best for you? (cheapest total payments for you)
3) Best for the neighbor? (gets him the most money)