Another investor has proposed putting up the $500,000 but this investor wants the money to be be paid back over ten years at $50,000 per year in principle plus interest on the outstanding loan balance. Payments would be made once per year, at the end of the year.

Question #4: Which of the two alternatives is riskier for the company? What are those risks?

Question #5: Which of the two alternatives is riskier for the investor? What are those risks?