A small corporation is looking to borrow $750,000 is choosing between the following alternatives:
Alternative A: pay the loan off over ten years with level annual payments of $97,100
Alternative B: pay off the loan at the end of 10-years using the sinking fund method where the sinking fund rate is j = 4% and annual interest payments are made assuming j = y.
Which of the following statements is/are true?
(I)If y = 0.03 for Alternative B then the corporation would chose Alternative A
(II)If y = 0.05 for Alternative B then the corporation would choose Alternative B

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The Answer of A small corporation is looking to borrow $750,000 is choosing between the following alternatives:
Alternative A: pay the loan off over ten years with level annual payments of $97,100
Alternative B: pay off the loan at the end of 10-years using the sinking fund method where the sinking fund rate is j = 4% and annual interest payments are made assuming j = y.
Which of the following statements is/are true?
(I)If y = 0.03 for Alternative B then the corporation would chose Alternative A
(II)If y = 0.05 for Alternative B then the corporation would choose Alternative B

A Small Corporation Is Looking to Borrow $750,000 Is Choosing