Three years ago, you borrowed $$500,000$ to invest in building a high$-$end commercial office complex at an annual interest rate of $8$ percent $($this translates to an interest expense of $$40,000$ per year$).$ Your expectation was that when rented, the complex would generate $$100,000$ per year in rent, enough to make the interest payment, pay down the principal of the loan, and earn a tidy profit for yourself. However, when the project was complete, the market for high$-$end office space was in a glut and only $10$ percent of your building was rented, generating only $$10,000$ per year in rental income. Should you be expected to make the contractual interest payments on the loan? Where will the money come from?

multiple choice

Yes, pay what you can $($$$10,000$ per year$),$ when you can, for as long as it takes to satisfy the terms of the loan.

Yes, a contract is a contract. You will need to use other sources of income, savings, or sell other personal assets to make these payments.

No$,$ it's not your fault that demand for high$-$end office space declined.

No$,$ walk away from the investment and let the lender repossess it$.$ Try to recoup the amount you borrowed.