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The Up&Coming Import Company is in the process of taking a five-year loan of $60,000 with The Export Bank. The bank offers the company payment
The Up&Coming Import Company is in the process of taking a five-year loan of $60,000 with The Export Bank. The bank offers the company payment options: 1) Pay all of the interest (12% per year) and principal in one lump sum at the end of 5 years; 2) Pay interest at the rate of 12% per year for 4 years and then a final payment of interest and principal at the end of the 5 year, 3) Pay 5 equal payments at the end of each year inclusive of interest (at 12%) and part of the principal Under which of the three options will the owner pay the least interest and why
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