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Option 1: Inwesting the $50,000 in an imestment that would pay a rate of return of 9.5% anntatly. compounding quarterly for 5 vears. Option 2:
Option 1: Inwesting the $50,000 in an imestment that would pay a rate of return of 9.5% anntatly. compounding quarterly for 5 vears. Option 2: Obtaining a personal ioan of $35,000 from a bank to take the hodiday now and pay the debt in 5 years. The current interest rate the bank offers for the new personal loan is 5% annually, comperanting monthly. Required: a) Compute the effecthe annual interest rate (EAR) Katie would actually get in Option 1? (2 marks) ANSWER a): * Answer box will enlarge as you type b) Calculate the amount of money Katie would accumulate in Option 1 after 5 years? (3) marks] ANSWER b): c) How long does Katie need to wait untishe has $85,000 to take her dream holiday in Option 1? (3 marks) ANSWERC): d) Calculate the monthly debt repayment Katie needs to pay the baric for 5 wean in Option 2 ? (3 marks) I. ANSWER d)
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