IE-203 Recitation-1 Questions Question-1 A company borrowed $120,000 for purchasing new machinery. If the interest rate on the loan is 11%, answer the following: a) Assume that the company should pay only interest at the end of each year for three years after which the entire amount is due. Draw the cash flow diagram (CFD). b) Assume that at the end of each year the company should pay interest and same portion of the principal for three years. Draw the CFD. c) Given the CFD in parts a and b, which payment method would you choose? Why? d) Given the CFD in parts a and b and assuming that the interest rate is 0%, which payment would you choose, why