Mr Miller's third question is with regards to his daughter Kate's education. Kate is 8 years old today. She will be in college when she turns eighteen,that is, ten years from today. By that time, Mr Miller must have retired too. Since the Millers are considering relocating to the west coast upon retirement. Kate will pursue higher education somewhere close by. Her college costs for the four consecutive years are estimated to be $36,000, $37,000, $38,000, $39,000 payable at the beginning of each school year. Mr Millerb wants your assistance in planning for Kate's education. You are excited about a sizeable deposit account to be started under your management. Mr Miller is agreeable to formally start a savings plan today. He is willing to save a certain sum of money on an annual basis until Kate is ready to start her college education. You have one final question for Mr Miller. You ask," Do you wish to continue your contributions even after Kate begins in the fall of 2018?" He replies, "No! I consider retiring by the end of May 2028 and I can contribute only during my active employment." Ignore a few days difference, if any, between the dates of savings plan and the start of school year. The Millers have the abilitynto save 9% per annum through your bank.

1) How much should the Millers save each year to facilitate Kate's education?

2) If the Millers desire to save for the same purpose on a monthly basis, how much should they save each month to facilitate Kate's education?

Before leaving, Mr Miller talks about seeing Jim, a former schoolmate, this morning about to enter a Payday Loan office. It seems that Jim will borrow $400 today and he must return $500 next week, i.e exactly seven days from today. Mr Miller is curious to know the interest rate on such a loan.

3) What is the Annual Percentage Rate (APR) on this loan?

4) What is the Effective Annual Rate (EAR) on this loan?