Mary Scott needs 10,000$ to finance her senior year in college. She is considering two sources of the needed cash:

1. A local bank offers to loan her 10,000$ under the condition that she make monthly payments of 332.14$ for 3 years. The initial payment starts at the end of the first month.
2. A friend of her parents offers to loan her 10,000$ under the conditions that she pay him 14,429$ in 3 years.

Her choice requires to evaluate cash flows so she can minimize cost of the loan.

1. What is the interest rate charged on bank loan? (2 points)
2. What is the interest rate required by friend? (2 points)
3. Which source of financing should Mary choose to minimize cost of education? (2 points)