Exercise 7-8 Principle due at maturity versus installments LO 7-1, 7-5 Sanders Co. is planning to finance an expansion of its operations by borrowing $48,500. City Bank has agreed to loan Sanders the funds. Sanders has two repayment options: (1) to issue a note with the principal due in 10 years and with interest payable annually or (2) to issue a note to repay $4,850 of the principal each year along with the annual interest based on the unpaid principal balance. Assume the interest rate is 9 percent for each option. Required a. What amount of interest will Sanders pay in year 1 under option 1 and under option 2? (Round your final answers to the nearest dollar amount.) Amount of Interest Under option 1 Under option 2 b. What amount of interest will Sanders pay in year 2 under option 1 and under option 2? (Round your final answers to the nearest dollar amount.) Amount of Interest Under option 1 Under option 2 c. Which option is more advantageous to Sanders? O Option 1 O Option 2