Question: Question 1 [25 marks]. (a) A lecturer borrows 10,000 from a bank with an effective interest rate of 3.5% per annum. She pays back the

Question 1 [25 marks]. (a) A lecturer borrows 10,000 from a

Question 1 [25 marks]. (a) A lecturer borrows 10,000 from a bank with an effective interest rate of 3.5% per annum. She pays back the loan after 5 years. How much does she pay back? (b) Determine the AER corresponding to the nominal rate of discount d(12)=7% per annum. (c) Suppose you are paying off your new fridge by monthly instalments of 25 paid in arrears over five years. Assuming an effective interest rate of 3% per annum, what was the price of the fridge? (d) Determine the value of the symbol a for an AER of 6%. (e) In return for a loan of 500, a loan shark charges 1 per day payable when the loan is paid back. What is the APR if you pay back the loan and fees after 155

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