Method of funding APITT has accumulated cash reserves of Jesco $6 million. The remaining capital costs will be funded by long-term borrowings. If option 1 is chosen, it will be funded by a 20 year commercial mortgage secured on the land and buildings. Interest will be fixed at 10% per annum, payable annually. APITT currently has no other long-term borrowings. If option 2 is chosen, it will be funded by one of the following methods: (i) A 15-year commercial loan taken out in Jesco $ at 11% per annum interest, capital repayable at the end of the term; (ii) A 15-year interest-free, non-repayable Miraco $ government loan, but for the duration of the loan the Miraco government would take a dividend each year equivalent to 21% of the profits earned in Miraco;

Recommendations about the choice of investment alternative and, if relevant, the method of funding.