Banking in Sherwood Forrest. Friar Tuck lent Robin Hood GBP1 40,000 to build an 20 addition to his hovel. Robin will pay the friar monthly interest on the loan over the next year at a stated annual interest rate of 6%. On the 12th payment, he will pay both the last interest payment and the principal of GBP 40,000. Upon receipt of each monthly interest payment from Robin, the good friar immediately deposit the money in a Nottingham bank account which offers a stated interest rate of 12% per annum compounded on a monthly basis. [Note: Robin Hood makes the first interest payment one month from today and the last payment twelve months from today.]

1. What is Robin's monthly interest payment?
2. What is the actual annual rate of return that friar is are able to make on the loan?