Problem:
You pay down 10% on a home with a purchase price of $280,000. The bank will loan you the remaining balance of $252,000 at 8.23% APR. You have an option to make annual payments or monthly payments on the loan. Both options have a 30-year payment schedule.
Requirement:
Question 1: What are the annuity payments under the annual plan?
Question 2: What are the annuity payments under the monthly plan?
Question 3: In terms of the total cash outflows and the effective cost of borrowing, briefly compare both plans.
Note: Please describe comprehensively and provide step by step solution.