A TEACHING-EXTENSION APPROACH TO LOAN COST COMPARISONS

Kim B. Anderson and Garnett L. Bradford

No 279430, 1981 Annual Meeting, July 26-29, Clemson, South Carolina from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: This article presents a systematic procedure for comparing three common types of loans--declining balance, add-on and discount--which have unequal and different types of finance charges. The procedure can be applied using handheld calculators, microcomputers or host computers. Its basic appeal is twofold: it provides a method useful in applied research and for teaching* undergraduate students and agricultural extension clientele. A method is presented for calculating an adjusted total loan cost and an adjusted APR for each type of loan. The adjusted APR's provide the most appropriate basis for a cost comparison of potential loans.

Keywords: Agricultural; Finance (search for similar items in EconPapers)
Pages: 21
Date: 1981-07
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea81:279430

DOI: 10.22004/ag.econ.279430

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