Sanders Company is planning to finance an expansion of its operations by borrowing $150,000. City...
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Accounting
Sanders Company is planning to finance an expansion of its operations by borrowing $ City Bank has agreed to loan Sanders the funds. Sanders has two repayment options: to issue a note with the principal due in years and with interest payable annually or to issue a note to repay $ of the principal each year along with the annual interest based on the unpaid principal balance. Assume the interest rate is percent for each option.
Required
a What amount of interest will Sanders pay in Year under option and under option
b What amount of interest will Sanders pay in Year under option and under option
c Which option is less costly in the long run?
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