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Sanders Co. is planning to finance an expansion of its operations by borrowing $46,900. 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 annualy or 21 to issue a note to repay $4,590 of the principal each year along with the annual interest based on the unpaid principal balance. Assume the interest rate is 9.5 percent for each option Required 2. What amount of interest wil Sanders pay in year 1 under option 1 and under option 2? (Round your final answers to the nearest dollar amount.) b. What amount of interest will Sanders pay in year 2 under option 1 and under option 2? (Round your final answers to the nearest c. Which option is more advantageous i Sanders wants to minimize costs? Option Option 2 Your interest Year 2 More advantageous option Colson Company has a line of credit with Federal Bank. Colson can borrow up to $497,500 at any time over the course of the calendar year. The following table shows the prime rate expressed as an annual percentage along with the amounts borrowed and repaid during the first four months of the year. Colson agreed to pay Interest at an annual rate equal to 3.00 percent above the bank's prime rate. Funds are borrowed or repaid on the first day of each month. Interest is payable in cash on the last day of the month. The interest rate is applied to the outstanding monthly balance. For example, Colson pays 6.25 percent (3.25 percent +3.00 percent) annual interest on $82,900 for the month of January Amount Borrowed Prime Rate for Repaid) the Month $82.900 February 119,700 (24,600) January March April 3.250 2.25 2.75 3.25 28, 100 Required a. Compute the amount of interest that Colson will pay on the line of credit for the first four months of the year, b. Compute the amount of Colson's ability at the end of each of the first four months Complete this question by entering your answers in the tabs below. Required A Required Compute the amount of interest that Colson will pay on the line of credit for the first four months of the year. (Round your answers to the nearest whole dollar) Interest Pald Month January February Marchi April year. The following table shows the prime rate expressed as an annual percentage alc during the first four months of the year. Colson agreed to pay interest at an annual rate rate. Funds are borrowed or repaid on the first day of each month. Interest is payable 1 rate is applied to the outstanding monthly balance. For example, Colson pays 6.25 per Interest on $82,900 for the month of January. Month January February March April Amount Borrowed or (Repaid) $ 82,900 119,700 (24,600) 28,100 Prime Rate for the Month 3.25% 2.25 2.75 3.25 Required a. Compute the amount of interest that Colson will pay on the line of credit for the first 1 b. Compute the amount of Colson's liability at the end of each of the first four months. Complete this question by entering your answers in the tabs below. Required A Required B Compute the amount of Colson's liability at the end of each of the first four months. (Do no Round your final answers to the nearest whole dollar.) Month Balance End of Month January February March
