You have decided to purchase a small industrial warehouse. The purchase price is $$1$ million, and you expect to

hold the property for five years. You have narrowed your choice of debt financing to packages to the following

two alternatives:

$$700,000$ loan, $6$ percent interest rate, $30-$year term, annual, interest$-$only payments $($the annual payment

will not include any amortization of principal$),$ and $$50,000$ in up$-$front financing costs.

$$750,000$ loan, $6$ percent interest rate, $30-$year term, annual, interest$-$only payments. No up$-$front financing

costs.

Required:

What is the difference in the present value of these two loan alternatives? Assume the appropriate discount rate

is $6$ percent.

Note: Do not round intermediate calculations. Enter your answers in dollars, rather than in millions of

dollars.$)$You have decided to purchase a small industrial warehouse. The purchase price is $$1$ million, and you expect to hold the property for five years. You have narrowed your choice of debt financing to packages to the following two alternatives:

$$700,000$ loan, $6$ percent interest rate, $30-$year term, annual, interest$-$only payments $($the annual payment will not include any amortization of principal$),$ and $$50,000$ in up$-$front financing costs.

$$750,000$ loan, $6$ percent interest rate, $30-$year term, annual, interest$-$only payments. No up$-$front financing costs.

Required:

What is the difference in the present value of these two loan alternatives? Assume the appropriate discount rate is $6$ percent.

Note: Do not round intermediate calculations. Enter your answers in dollars, rather than in millions of dollars.$)$