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Principal and Interest Required per Litre to Repay Quota Loan

Author: Brian Lang - Dairy Technology Transfer and Planning Specialist/OMAFRA
Creation Date: 05 April 2002
Last Reviewed: 15 April 2003
Interest Rate at 0%
Quota Price
Length of Loan in Years
$/kg
5 7 10 12 15 20
$18,000
0.385
0.275
0.192
0.160
0.128
0.096
$20,000
0.427
0.305
0.214
0.178
0.142
0.107
$22,000
0.470
0.336
0.235
0.196
0.157
0.118
$24,000
0.513
0.366
0.256
0.214
0.171
0.128
$26,000
0.556
0.397
0.278
0.232
0.185
0.139
$28,000
0.598
0.427
0.299
0.249
0.199
0.150
$30,000
0.641
0.458
0.321
0.267
0.214
0.160

 

Interest Rate at 4%
Quota Price
 Length of Loan in Years
$/kg
5
7 10 12 15 20
$18,000
0.425
0.315
0.234
0.202
0.171
0.140
$20,000
0.472
0.351
0.260
0.225
0.190
0.155
$22,000
0.519
0.386
0.286
0.247
0.209
0.171
$24,000
0.567
0.421
0.312
0.269
0.228
0.186
$26,000
0.614
0.456
0.338
0.292
0.247
0.202
$28,000
0.661
0.491
0.363
0.314
0.266
0.218
$30,000
0.708
0.526
0.389
0.337
0.285
0.233

 

Interest Rate at 6%
Quota Price
 Length of Loan in Years
$/kg
5
7 10 12 15 20
$18,000
0.446
0.337
0.256
0.225
0.195
0.165
$20,000
0.496
0.375
0.285
0.250
0.216
0.184
$22,000
0.545
0.412
0.313
0.275
0.238
0.202
$24,000
0.595
0.450
0.342
0.300
0.260
0.220
$26,000
0.644
0.487
0.370
0.325
0.281
0.239
$28,000
0.694
0.524
0.399
0.350
0.303
0.257
$30,000
0.744
0.562
0.427
0.375
0.325
0.276

 

Interest Rate at 8%
Quota Price
 Length of Loan in Years
$/kg
5
7 10 12 15 20
$18,000
0.468
0.360
0.280
0.250
0.221
0.193
$20,000
0.520
0.400
0.311
0.278
0.245
0.214
$22,000
0.572
0.440
0.342
0.305
0.270
0.236
$24,000
0.624
0.480
0.373
0.333
0.294
0.257
$26,000
0.676
0.520
0.404
0.361
0.319
0.279
$28,000
0.728
0.560
0.436
0.389
0.343
0.300
$30,000
0.780
0.600
0.467
0.416
0.368
0.322

 

Interest Rate a 10%
Quota Price
 Length of Loan in Years
$/kg
5
7 10 12 15 20
$18,000
0.490
0.383
0.305
0.276
0.248
0.223
$20,000
0.545
0.426
0.339
0.306
0.276
0.247
$22,000
0.599
0.468
0.373
0.337
0.303
0.272
$24,000
0.654
0.511
0.407
0.368
0.331
0.297
$26,000
0.708
0.553
0.441
0.398
0.358
0.322
$28,000
0.763
0.596
0.474
0.429
0.386
0.346
$30,000
0.817
0.639
0.508
0.460
0.413
0.371

 

Interest Rate a 12%
Quota Price
 Length of Loan in Years
$/kg
5
7 10 12 15 20
$18,000
0.513
0.407
0.331
0.303
0.277
0.254
$20,000
0.570
0.453
0.368
0.337
0.308
0.282
$22,000
0.627
0.498
0.405
0.370
0.339
0.311
$24,000
0.685
0.543
0.441
0.404
0.369
0.339
$26,000
0.742
0.588
0.478
0.438
0.400
0.367
$28,000
0.799
0.634
0.515
0.472
0.431
0.395
$30,000
0.856
0.679
0.552
0.505
0.462
0.424

 

Based on 3.9% fat test = 9,359 litres milk.
No income tax adjustments or cost of production included. Assumes 100% fill of quota, no allowance for production incentive sleeves.

Example: A loan to buy quota at $18,000 at 8% over 10 years costs 28.0 cents per litre.

Different fat tests will affect the number litres of milk that quota covers and therefore the cost of loan per litre.

 

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