You are negotiating a $1 million loan for your employer. The lender offers you a choice:

• Payment schedule A requires you to pay $100,000 at the end of the year for the first five years, with a final payment of $1,000,000 at the end of the sixth year, for a total of $1.5 million in payments.

• Payment schedule B requires you to make one payment of $300,000 at the end of the fifth year and a second payment of $1,300,000 at the end of the sixth year, for a total of $1.6 million in payments.

If your discount rate is 8 percent, which payment schedule would you prefer and why?