Finance the rest at a lower interest rate

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A farm is being offered for sale at $4,000 per acre

A buyer thinks he can come up with a down payment of $1,300 per acre and he hopes to finance the rest at a lower interest rate. Approximately how low must the interest rate be for the net profit of $150 per acre to meet the loan payments on a loan of $2,700 for 20 years?

If the interest rate remains at 8%, would it do any good to increase the length of the loan in 3 above? If yes, how long? If no, why not?

Reference no: EM13766422

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