3. A loan shark in Waterdown charges an interest rate of 4.5% per month on loans to its customers. The APR and EAR on these loaned funds are __ and ___ respectively. (round up to the nearest full number)

a. 54%; 169%

b. 65%; 88%

c. 54%; 70%

d. 4.5%; 54%

4.On August 1, you borrow $239,000 to start a business. The mortgage rate is 7.75%. The loan is to be repaid in equal monthly payments over 20 years. The first payment is due on September 1. How much of the second payment applies to the payment towards principal payment? (Assume that each month is equal to 1/12 of a year.)

a. $1962.07

b. $1540.84

c. $421.23

d. $1543.54