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4) You need $7500 to buy a second-hand car. You borrow the money from your parents and agree to pay back $9,350 in 27 months

4) You need $7500 to buy a second-hand car. You borrow the money from your parents and agree to pay back $9,350 in 27 months time. Calculate: [7]

a. the annual simple interest rate for this transaction, and [2]

b. the annual effective rate for this transaction. [2]

c. Compare your answers to a. and b. and interpret. [3]

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