Suppose your company is purchasing equipment for $2,000,000. You are presented two choices to finance these assets: an installment loan for the full amount at 10% for 5 years or to issue non-cumulative, $125 par, 10% preferred stock.

The payment on the installment is $527,593 per year for 5 years:

Period	Begin Balance	Installment	Interest	Reduction	Ending Balance
1	2,000,000	527,593	200,000	327,593	1,672,407
2	1,672,407	527,593	167,241	360,352	1,312,054
3	1,312,054	527,593	131,205	396,388	915,667
4	915,667	527,593	91,567	436,026	479,640
5	479,640	527,593	47,953	479,640	-

Which of these options would you choose? Why?