Interest rates compounded annually and annual payments

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Reference no: EM131065663

Your colleague has purchased a business for $900,000 and is setting up the financing. They have been given two options by the bank. Option A is to extend the term to 20 years and then have an interest rate of 12% and Option B is to have a term of 15 years and 10% interest rate. Both options have interest rates compounded annually and annual payments. a. Provide the total annual loan payments, total term interest and total term principal paid, and the principle paid to the bank in in year one. b. The bank offers a variation of Option B -called Option C where the payments and interest rates compounding were both changed to be monthly? Recalculate the values. c. Make a recommendation to the firm considering Options A, B and C and the 5Cs and 3 Rs.

Reference no: EM131065663

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