Fixed and Variable Rate Debt - Gates Memorial Hospital recently recruited two young physicians who are attempting to start a new partnership practice in a smaller community located about 20 miles from the hospital. The physicians do not know each other and are relocated from California and Mississippi to the Gates Memorial Hospital in New York State. The two physicians have been negotiating to purchase a building currently being occupied by a retiring physician to practice medicine. The property is on the market for $350,000 and the two physicians have enough cash for a 20% down payment. They have a difference of opinion as to whether or not they should borrow money based on a fixed or variable rate of interest. The current fixed rate for a 20-year mortgage is 4.0%; while the variable rate is at 3.5% and constant for 12 months. You serve as their financial consultant. Further, would you recommend proceeding with this concept or evaluating alternative assumptions? Explain the pros and cons of each option and recommend a decision.