Q5. Cominco Ltd needs to borrow approximately $2 million to finance the purchase of a gem-sorting machine for its diamond mine. Its financial manager is considering the following alternatives: i. Cominco's bank will lend $2 million, repayable in four annual payments at an interest rate of 8.5 per cent per annum. ii. The equipment supplier has offered to finance the gem sorter with an initial payment of $500 000, followed by annual instalments of $460 000 at the end of each of the next 4 years. iii. A finance broker can arrange a $2 million loan repayable in a lump-sum payment of $2 761 513 in 4 years' time. The broker will charge an up-front fee of 1 per cent of the loan principal. a. What are the annual repayments on the bank loan? b. What is the interest rate on the finance broker's loan? c. Which of the three alternatives provides the lowest cost finance? (Hint: compare the difference between the principal and the PV of repayments)