Please use units and complete sentences to answer questions show work

Part 1: Your friend has $7,000 that she wants to invest so that, someday, she will be able to have a wombat rescue in Australia. She estimates that it will cost $20,000 to start her project. Her banker suggests three different investment opportunities.

1. Savings option #1: A CD with an APR of 2.02% of simple interest (6 pts) How long it will take your friend to reach her goal of $20,000 if she puts all her money into this investment? (round answers to 2 decimal places) (Note: A = P(1+rt) is the formula for simple interest)

2. Savings option #2: A CD with an APR of 1.94% compounded daily (6 pts) How long it will take your friend to reach her goal of $20,000 if she puts all her money into this investment? (round answers to 2 decimal places)

3. Savings option #3: A CD with an APR of 1.96% compounded monthly (6 pts) How long it will take your friend to reach her goal of $20,000 if she puts all her money into this investment? (round answers to 2 decimal places)

Part 2: Your friend is thankful for your calculations and moves her money into savings option #3. With this information, she admits she should have started saving a long time ago. If the Wombat rescue is to become a reality in the near future, she needs to consider taking out a loan. Her bank offers the following loan options.

4. Loan option #1: Loan term is flexible, APR 10.75%, the loan amount is open-ended (12 pts)

Although the term for this loan is flexible, your friend would like to pay off the loan in 5 years. Additionally, the limit of this loan is open-ended, which means she can increase her loan amount as needed; however, your friend only wants to borrow $13,000 (remember she already has $7,000). Calculate the following based on these criteria.

a. How much should your friend expect to pay monthly on this loan?

b. How many payments will she have to make before this loan is paid off?

c. How much total interest will she pay over the life of this loan?

5. Loan option #2: Loan term is 48 months, APR 5.50%, loan amount $20,000 (12 pts)

This loan is secured, which means her savings account is held as collateral for the loan, and once the loan is paid off, the hold is released outstanding principal balance. For this reason, she needs to borrow the full amount, $20,000. Calculate the following based on these criteria.

a. How much should your friend expect to pay monthly on this loan?

b. How many payments will she have to make before this loan is paid off?

c. How much total interest will she pay over the life of this loan?

6. Loan option #3: Loan term is 120 months, APR 8.75%, loan amount $20,000 (12 pts)

This loan is secured, which means her savings account is held as collateral for the loan, and once the loan is paid off, the hold is released outstanding principal balance. For this reason, she needs to borrow the full amount, $20,000. To pay this loan off faster, your friend is willing to pay an additional $162.10 per month. Calculate the following based on these criteria.

a. How much should your friend expect to pay monthly on this loan?

b. How many payments will she have to make before this loan is paid off?

c. How much total interest will she pay over the life of this loan?

7. Which loan option would you recommend for your friend? (6 pts)

Mathematically justify answer using the information calculated in the previous questions. need to show consideration for things such as monthly payments, interest paid, and the total cost of the loans. You will lose points if your answer is not wellsupported with appropriate calculations.

Part 3: As luck would have it, your friend wins the lottery and now has a total of $15,000. Since she is only $5,000 from her goal, she decides that investing is the BEST option. After all, she wasn't too thrilled about paying the interest calculated in Part 2.

8. How long will it take? (10 pts) If your friend decides to invest the $15,000 using savings option #3 in part 1 (APR of 1.96% compounded monthly), how long will it take for her to reach her goal of $20,000? (round answers to 2 decimal places)

9. What about additional payments? (10 pts) At this point, your friend is very eager and says she would like to start the wombat rescue in 3 years. You explain for that to happen, she must also make monthly deposits into her investment account to reduce the years of savings. In addition to the initial $15,000, how much should she deposit monthly to achieve her goal (Note: she's using savings option #3)? (round answers to 2 decimal places) 3

Part 4: Now that your friend has settled on a plan to invest her $15,000 over 3 years using savings option #3 with additional payments, let's calculate the total and annual returns.

10. Total Return (10 pts) Compute the total return of your friend's investment. Write your answer as a percentage, rounded to 2 decimal places. Your friend asks, "what does total return mean?" Explain this concept so that she understands in context of her situation.

11. Annual Return (10 pts) Compute the annual return of your friend's investment. Write answer as a percentage, rounded to 2 decimal places. Your friend asks, "what does annual return mean?" Explain this concept so that she understands in context of her situation.