Answer:
C. higher; less interest
Explanation:
The reason is that the interest paid in long term borrowing is more than the same amount borrowed for short time. The reason is that the interest grows with the passage of time which means:
Interest is directly proportional to Time
Greater the time greater the interest on loan.
Smaller the loan smaller the interest on loan.
Furthermore, the company on a short term loan pays lower total amount (not talking about rate) of interest and greater amount of principal amount.
This means that:
Principal amount payments is inversly proportion to Time of loan
Greater the time allowed to payback the loan then the lower would be the annual principal payments and vice verse.
Also remember that:
Mortgage payment = Principal amount + Interest paid
This means mortgage on a short term loan will be higher because principal much more higher and interest paid are less in amount and vice versa
