Suppose that the Mechanical Engineer requires $8000 funding to develop the prototype device for the quick-release carrier fastening system for given off-road vehicles. She has two choices for funds:
i) Get the simple interest loan from the Aunt at 6% per month interest; or ii) get the SBA loan at 5.5% per month with interest compounded monthly. If she pays off loan principal and interest in single payment 5 months later, that financing method must she choose (Aunt or SBA)?
b) Suppose that procurement delays coincide with the change in SBA loan rate to 5% per month with interest compounded monthly. Now, which financing method must she choose (Aunt or SBA)?