Problem 3. A loan is comprised of principal and interest. The principal is the initial money that is borrowed, while the interest is the payment charged to borrow the principal. For Problem 1, consider an initial principal of $10,000, an interest rate of 5% compounded annually, and that the loan will be repaid in 5 years. Three possible repayment plans are described below. Option 1) For each year, a constant principal payment (1.e. principal is divided equally among all years) is made, and each year's interest payment is paid. Option 2) The loan (principal plus interest) is paid off in 5 equal payments (hint: think annuity; this is the most common loan repayment schedule) Option 3) No payment is made until the final year, when everything is paid off in one payment. Complete the following for each Option: a) Complete the table below for each option b) Use the receipts and disbursements columns to draw a cash flow diagram for each option Interest Owed Interest Principal Payment Payment Total Payment Receipts Dish Balance of end of year 10,000 0 Option 1 Nyear Amount owed Beginning of the year 0 1 10000 2 8000 3 6000 4 4000 5 2000 Total 0 500 500 500 500 500 Interest Owed Interest Principal Total Payment Payment Payment Receipts Disk Balance of end of year Option 2 Nyear Amount owed Beginning of the year 0 1 10000 2 8000 3 6000 4 4000 5 2000 Total 0 10,000 0 500 500 500 500 500 Nyear Interest Owed Interest Payment Principal Total Payment Payment Receipts Disk Balance of end of year 10,000 0 Option 3 Amount owed Beginning of the year 0 1 10000 2 8000 3 6000 4 4000 5 2000 Total 0 500 500 500 500 500