6.

Sovereign Debt Negotiations. A sovereign borrowor is considering a $100 milioa loan for a 4 year maturity. It will be an arnortizing loan, mearing that the interest and principal payments will total, annualy, to a constant amount over the maturily of the loan. There is, however, a debate ower the appropriate interest rate. Tho borrower believes the appropriato rate for its current credit standing in the makket loday is 10%, but a number of international banks with which it is eegotiating are arguing that is most Bcely 14%, at the minimum 10%. What impact do these dillerent interest rates have on the prospective annual payments? The annual payment, i the interest rate was 10% in 5 (Reand to the nearest dollar)