You have the opportunity of purchasing a farm for $500,000. The owner will allow a $100,000 down payment with the remainder financed in one of the following ways.

1. Equal annual payments with an interest rate of 7% for 20 years.

2. Equal annual payments with an interest rate of 10% for 15 years.

3. Equal quarterly payments with interest rate of 8% for 15 years.

4. Equal principal payments each year with interest rate of 8% for 10 years.

Determine the following: a. The payments for options 1-3.

b. The total interest paid for options 1-3.

c. Principal and interest paid in each of the first 4 years for option 3 and 4. (you may not know how to do option 4).

d. Which option (1-4) would you choose? Why?