Assume a project has a CF0 of \($100\),000. The investment is expected to generate \($5\),000 annually for the next four years followed by a return of the principal investment, \($100\),000. If the annual interest is 6.5% and the Loan-to-Value on this investment is changed from 30% to 85%, what is the difference in annual debt service? What is the difference in IRR?

a 3,575, 7%

b 1,975, 4%

c 1,950, −3%

d 3,575, 3%