3. Consider a group of 60 RM410 students, each of whom is interested in borrowing a loan of $2000 for 1 year. Steve requires an annual effective interest rate of 3.25% assuming there would be no default. Find the annual effective interest rate that Steve should offer if it is expected that 4 borrowers from this group will default. a) 5.23% b) 7.12% c) 9.25% d) 10.63% e) 11.35%