1 year ago, Sophia took out a 1-year personal loan of $3500 from her bank at a fixed interest rate of 5% p.a. compounded monthly. She is supposed to make a single repayment today to pay off the loan. However, she recently lost her job and would not be able to repay the money on time. The bank approves Sophias application to make the full repayment in 6 months time. The monthly effective interest rate increases by 0.05% from today and remains unchanged until Sophia pays off the loan.

1. Which of the following formula can be used to find the amount of repayment Sophia needs to make in 6 months? (0.5 mark)

   FV=PV*(1+i₁)^n₁*(1+i₂)^n₂

   FV=PV*(1+i₁)^n₁+PV(1+i₂)^n₂

   FV=PV*(1+i₁)^n₁+(1+i₂)^n₂

   FV=PV(1+i₁*n₁)+PV(1+i₂*n₂)

   FV=PV(1+i₁*n₁)*(1+i₂*n₂)

   FV=PV(1+i₁*n₁)+(1+i₂*n₂)