A firm has taken a loan of $80,000 at an interest rate of 9% p.a. The term for repayment is 5 years. The following three options of repayment are under consideration.

a) Repay the loan as a bullet payment, where only interest is paid every year and the entire principal is paid in the last year.

b) Repay the loan as a sinking fund where the loan amount is repaid in 5 instalments of 16,000 each at the end of every year along with the interest.

c) Repay the loan under the amortization structure with year-end instalments.

Required:

Analyze the three options showing the interest payment, principal repayment, and annual total cash flow for the five-year period.