To expand its operation, the International Tools Inc (ITI) has applied for a $3,500,000 loan from the International Bank. According to ITI's financial manager, the company can only afford a maximum yearly loan payment of $1,000,000

The bank has offered ITI, (1 ) a 3-year loan with a 10 percent interest rate, (2 ) a 4-year loan with a 11 percent interest rate, or (3 ) a 5-year loan with a 12 percent interest rate.
(a) Compute the loan payment under each option.
(b) Which option should the company choose?

(a)
(1 ) Using financial calculator: PV=3500000, N=3, FV=0, I = 10, CPT PMT = 1,407,402
(2 ) Using financial calculator: PV=3500000, N=4, FV=0, I = 11, CPT PMT = $1,128,304.32
(3 ) Using financial calculator: PV=3500000, N=5, FV=0, I = 12, CPT PMT = $ 970,873.79
(b) The company should choose option #3.