A bank has offered a loan of $50,000 to a firm for a year. Given the nominal interest rate is 5% p.a. and interest is to be paid at the beginning of the loan. The effective interest rate of the loan (rounding to 1 decimal place) is

Question 5 options:

1)

2.5% p.a.

2)

5% p.a.

3)

5.3% p.a.

4)

none of the above