5. (20 pts) A bank advertises loans with an annual interest rate of 5%. If you borrow $40,000 from the bank and pay it back with equal annual payments over 5 years, (a) what is your annual payment? (b) What is the total interest (in dollars) you have paid to the bank over the life of the loan? Show a cash ow diagram from the standpoint of the borrower. Show your work and final answer(s). 6. (20 pts) An entrepreneur tells you that if you invest in his company, he will give you the equivalent of 30% APR (annual percentage rate) (annual compounding only) for five years. At the end of five years, he will pay you back in a lump sum of $700,000. How much do you invest in this opportunity y to achieve the 30% APR? Show a cash ow diagram. Show your work and final answer(s)