Question 1 1. Rabia borrowed Rs.500,000 from a bank on terms of 20 year, 10% nominal interest rate. The loan calls for semiannual payments. (4 marks) a) Calculate the amount of semiannual payment you would be paying every period? b) How much is the total amount of interest that Rabia has paid in 4 years? What is the ending balance of principal after four years? II. In order to facilitate your customers to buy household items from your shop in these challenging times, you are offering credit. The customers will pay interest on the outstanding balance to you as a compensation to have more time to make payment on the purchases. The interest on outstanding balances will be paid quarterly. However, you need to finance working capital so that the daily operations are not halted. Therefore, you must borrow funds from a bank at a quoted interest rate of 8%, quarterly compounding. To offset your overhead, you want to charge your customers the effective rate of interest that is 1.5% more than the bank is charging you. What nominal rate should you will charge your customers? (4 marks) III. Your uncle left you $100,000 in a trust fund that pays 8.5% interest. You must spend the money on your university education, and you must withdraw the money in 4 equal installments, beginning immediately. How much could you withdraw at the beginning of each year and end up with zero in the account? (First make a time-line indicating inflows and outflows and then calculate for the asked outflut). (4 marks)