Question: AI Larson asked a bank to lend him money on January 1, based on the following repayment plan: the first payment would be $2 on

AI Larson asked a bank to lend him money on January 1, based on the following repayment plan: the first payment would be $2 on February 28, with sub-sequent monthly payments increasing by $2 a month on an arithmetic gradient. (The March 31 payment would-be $4; the April30 payment would-be $6, etc) The payments are to continue for 11 years, making a total of 132 payments.

(a) Compute the total amount of money AI will pay the bank, based on the proposed repayment plan.

(b) If the bank charges interest at 12% nominal per year, compounded monthly, how much would it be willing to lend Al on the proposed repayment plan?

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