Basis of interest rate-what alternative is superior

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Reference no: EM13998715

1) You need to borrow $10,000 and the following alternatives are available: -

a) Pay $2983 at the end of each year for 5 years, starting at the end of the first year (5 payments total)

b) Pay $237.90 at the end of each month for 5 years, starting at the end of the first month (60 payments total)

On the basis of interest rate, what alternative is superior? Please draw cash flow diagrams.

Reference no: EM13998715

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