Problem: You are in need for a student loan to pay for the Fall semester. Your bank agreed on a $$8000$ for $4$ years at a compound interest rate of

per year. The bank is giving you $3$ options to repay your debt:

Option $1$: Pay all the amount at the end of year $4$

Option $2$: Pay Interest annually and principal paid at the end

Option $3$: Pay interest and a portion of the principal annually

Construct the payment schedule for each one of the above options and answer the following:

How much interest will you pay for this loan in each case?

How much is the total amount at the end of $4$ years?

Which one potion will you choose? Why?

Draw Cash Flow Diagram for each one of the options

Note: This can be worked in Excel