A hospice wishes to buy equipment. It has $40,000 of available financing from equity and wishes to borrow $60,000.

a. If it borrows the $60,000 from a bank on a note at 11% for 5 years, what are the payments each year?

b. If it takes a 5-year mortgage on the equipment from a bank at 10%, the annual payments will be $15,827.85. How much interest will be paid each year? How much principal will be repaid each year?