Sanders Company is planning to finance an expansion of its operations by borrowing $53,200, City Bank has agreed to loan Sanders the funds. Sanders has two repayment options: (1) to issue a note with the principal due in 10 years and with interest payable annually or (2) to issue a note to repay $5,320 of the principal each year along with the annual interest based on the unpaid principal balance. Assume the interest rate is 12 percent for each option. Required a. What amount of interest will Sanders pay in Year 1 under option 1 and under option 2? b. What amount of interest will Sanders pay in Year 2 under option 1 and under option 2? c. Which option is less costly in the long run? Complete this question by entering your answers in the tabs below. Required A Required B Required C What amount of interest will Sanders pay in Year 1 under option 1 and under option 27 (Round your final answers to the nearest dollar amount.) Under option 11 Under option 2 Amount of Interest out A Required B >

Sanders Company is planning to finance an expansion of its operations by borrowing $53,200, City Bank has agreed to loan Sanders the funds. Sanders has two repayment options: (1) to issue a note with the principal due in 10 years and with interest payable annually or (2) to issue a note to repay $5,320 of the principal each year along with the annual interest based on the unpaid principal balance. Assume the interest rate is 12 percent for each option. Required a. What amount of interest will Sanders pay in Year 1 under option 1 and under option 2? b. What amount of interest will Sanders pay in Year 2 under option 1 and under option 2? c. Which option is less costly in the long run? Complete this question by entering your answers in the tabs below. Required A Required B Required C What amount of interest will Sanders pay in Year 1 under option 1 and under option 27 (Round your final answers to the nearest dollar amount.) Under option 11 Under option 2 Amount of Interest out A Required B >

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter22: Providing And Obtaining Credit

Section: Chapter Questions

Problem 3P: Del Hawley, owner of Hawleys Hardware, is negotiating with First City Bank for a 1-year loan of...

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