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Sanders Company is planning to finance an expansion of its operations by borrowing $46,800. City Bank has agreed to loan Sanders the funds. Sanders has

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Sanders Company is planning to finance an expansion of its operations by borrowing $46,800. 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 $4,680 of the principal each year along with the annual interest based on the unpaid principal balance. Assume the interest rate is 8 percent for each option. Required a. What amount of interest will Sanders pay in Year 1 under option 1 and under option 2 ? Note: Round your final answers to the nearest dollar amount. b. What amount of interest will Sanders pay in Year 2 under option 1 and under option 2 ? Note: Round your final answers to the nearest dollar amount. b. What amount of interest will Sanders pay in Year 2 under option 1 and under option 2 ? Note: Round your final answers to the nearest dollar amount. c. Which option is more advantageous to Sanders? Option 1 Option 2

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