Ambidex Is Considering a Bank Loan of $1,800,000 to Update

Multiple Choice

Ambidex is considering a bank loan of $1,800,000 to update its information system technology. It is expecting to finance the loan over five years, with annual payments, at an interest rate of 12%, compounded annually. Which of the following would provide the least cost alternative to Ambidex?

A) Maintain the current terms.
B) Make a down payment of 5% of the principle.
C) Spread the payments over eight years instead of five years.
D) Pay at the beginning, instead of at the end of the year.
E) Make quarterly payments instead of annual ones.