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Please present all final answers to two decimals for number (e.g. 1.23) and two decimals for percent (e.g. 1.23%). FULL working must be presented (with
Please present all final answers to two decimals for number (e.g. 1.23) and two decimals for percent (e.g. 1.23%).
FULL working must be presented (with formulas, working stages, and results with units).
Question 1 (25 marks): Suppose your friend wants to borrow $50,000 and considers the terms of two loans: Loan A: Paid back in 36 monthly instalments of $1,500 each Loan B: Paid back in 12 quarterly instalments of $5,000 each Assume that each instalment is made at the end of each period. Please help your friend to: a. Calculate the interest per compounding period of each loan. (10 marks) b. Identify which loan has the best deal in terms of the lowest effective annual cost. Based on your calculation, explain in simple terms which loan your friend should take and why. (10 marks) C. Provide the payment plan (a table of the amortisation plan) for the best-deal loan that you have recommended in the question above. (5 marks) (Show ALL workings)Step by Step Solution
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