3. You want to purchase a house for $600,000 and you will need to take out a loan for $500,000. The house has magnificent columns, tall windows and is beautifully landscaped with a lovely rose garden in the back. (Roses are your favorite!). Your biggest concern at the moment though is getting a good interest rate on your loan. The First National Bank of Barrington Hills offers you a 30-year loan making your payments $2,684.11 per month. What interest rate is the bank charging you? Please show your work.

4. If the real interest rate is 2.0% per year and the inflation rate is 1.50%, what is the approximate nominal interest rate?