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To expand its operation in Ontario, Dundar Mifflin has applied for a $3,500,000 loan from the...

To expand its operation in Ontario, Dundar Mifflin has applied for a $3,500,000 loan from the TD Bank. According to Dundar Mifflin financial analyst, the company can only afford a maximum yearly loan payment of $1,000,000. The bank has offered Dundar Mifflin the following:

Option 1: 3 year loan with an 8 percent interest rate

Option 2: 4 year loan with a 10 percent interest rate

Option 3: 5 year loan with a 12 percent interest rate

Required:

  1. Compute the loan payment under each option for year 1.
  2. Which option should the company choose?

Please provide step by step/explanation much appreciated

Solutions

Expert Solution

ekkarill92 answered 10 months ago
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