Bradley is planning on getting married and wants to purchase a house for $8,750 000. She made an agreement with the NHT to provide 40% financing for the new home. It was agreed with the NHT that she will make monthly payments over five (5) years at 5.95% per annum. The remainder of the funds required to cover the cost of the house will be borrowed from her commercial bank. The terms of the agreement for the commercial bank loan are, 15% down payment, and the balance is to be repaid at 9.25% interest over a 5-year period.

Required:

1. Calculate the annual payments to be paid over to the National Housing Trust (NHT) if payments are made at the end of each year.
2. Calculate the annual end of year payments to be paid to the commercial bank.
3. Calculate the total amount of the payments and the amount of interest paid under each alternative.
4. Considering part (a), prepare the amortization schedule for this loan.

Under which of the two options will Bradley pay the least interest and why?