What amount of interest will sanders pay in year

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Sanders Co. is planning to ?nance an expansion of its operations by borrowing $51,100. City Bank has agreed to loan Sanders the funds. Sanders has two repayment options: (1) to issue a note with the principal due in 10 years and with interest payable annually or (2) to issue a note to repay $5,110 of the principal each year along with the annual interest based on the unpaid principal balance. Assume the interest rate is 7.5 percent for each option.

Required

Question 1: What amount of interest will Sanders pay in Year1 under option 1 and under option 2? (Round your final answers to the nearest dollar amount.)

Reference no: EM132495558

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