Construct a cash flow diagram illustrating the cash flows involved in the following transaction from the bank’s viewpoint. The amount loaned is $6000 at 4% compound interest for ten years. Be sure to label all amounts including the final repayment. The borrower repays the loan with the following schedule:
(a) Lump sum repayment at the end of the year 10 of the principle plus accrued interest.
(b) Year-end payments of equal installments as in a standard installment loan contract.
Determine the total interest given to the bank under each scenario. Show all cash flow diagrams and calculations for each scenario and label all cash flows.