Ann borrows $50,000 and may repay the loan in the following two options:

1) Level payments at the end of each quarter for 20 years with 10% nominal interest rate per year convertible quarterly;

2) Interest payments to loan lender and level deposits into a sinking fund to repay the principal at the end of each quarter for 10 years. The sinking fund earns i nominal interest rate per year convertible quarterly. The lender receives 12% nominal interest rate per year convertible quarterly.

The total payments over 20 years under option (2) are 20,000 less than the total payments under option (1). Calculate i.

*Write legibly. Show your steps. Correct your answers to 4 DECIMAL PLACES when necessary