Reference no: EM132706964

The local bank is offering several 5-year emergency loan options to support small businesses impacted by the pandemic. The bank offers these loans at a 15% annual interest rate. The loan options areas follows:

Option 1: Pay interest each year, but make no principal payment until the end of the loan period.

Option 2: Make equal end-of-year principal payments and pay interest each year on the unpaid balance at the beginning of the year.

Option 3: Make equal end-of-year payments over the loan period.

Option 4: Make no payments until the end of the loan period.

Problem 1: Develop the cash flow diagram for the four plans.