For the situation stated in Problem 32, let the interest on borrowed money go from 5 percent to 15 percent in 1 percent increments. For each borrowing rate, which repayment method is preferred? Do your answers match what is predicted in the text?

Data from problem 32

A ham radio operator wishes to borrow $160,000 to construct a world-class antenna system, transceiver, and amplifier at an electrically quiet location that can be accessed remotely and controlled via the Internet.

Microphone, Morse code, radio teletype, slow-scan TV, and a host of other modes may be used for contesting, amassing DX awards, and chatting from anywhere in the world. She borrows themoney at 8.5 percent. Inflation is running 3.8 percent. Her combinedMARRis 9 percent. The loan is to be paid back over 5 years. What is the amount to be paid at each year-end and the PW (using both then-current and constant-dollar approaches) if repayment follows

a. Method 1 (pay accumulated interest each year and principal at the end of the last year)?

b. Method 2 (make equal annual principal payments each year, plus interest on the unpaid balance)?

c. Method 3 (make equal annual payments)?

d. Method 4 (make a single payment of principal and interest at the end of the last year)?