You need to borrow $750,000 for exactly one year. Your bank has given you the choice of either borrowing cash at 10.25% p.a. or gold at 2.5% p.a., with both rates being compounded annually (hint: as they are compounded annually, these rates are the effective charges for borrowing). The current spot price of gold is $1,500 an ounce. If you choose to borrow gold, you will borrow exactly enough to give you $750,000 once you convert it to cash at the spot price. Further, if you borrow gold, at the end of the year, you must repay the loan in gold, including the interest. The risk free rate of interest is 5.5% p.a. continuously compounded, storage costs for gold are 1.5% p.a. continuously compounded. Given this option, would you prefer to borrow the $750,000 in cash or gold?