You are considering purchasing a lot adjacent to your laundry business to provide adequate parking space for your customers. You need to borrow $50,000 to secure the lot. You have made a deal with a local bank to pay the loan back over a five-year period with the following payment terms: 15%, 20%, 25%, 30%, and 35% of the initial loan at the end of first, second, third, fourth, and fifth years, respectively.
(a) What rate of interest is the bank earning from this loan?
(b) What would be the total interest paid over the five-year period?