You have decided to purchase some commercial property. The purchase price is $1,000,000 and you plan to keep the property for 5 years and then sell it (your hope is that the commercial real estate market will be booming in 5 years). You have two financing options:

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

- $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

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

Show your work.