Question: 2.1 Explain the difference between a nominal interest rate and an effective interest rate. 2.2 A bank has quoted the interest rate on a loan

2.1 Explain the difference between a nominal interest rate and an effective interest rate.

2.2 A bank has quoted the interest rate on a loan at 15% compounded quarterly. Calculate the effective rate.

2.3 You need R70 000 in 6 years time in order to afford a new car. If you are able to earn interest at 8% compounded annually, how much do you need to invest today in order to afford the car?

2.4 If you had R30 000 today, at what annual interest rate would you need to invest your money in order to have the required R70 000 in 6 years time?

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