Question 2 Universal Bank pays 9.2% interest, compounded annually, on time deposits. Dah Wah pays 9% interest, compounded monthly. (a) Based on effective interest rates, in |which bank would you prefer to deposit your money? (b) Could your choice of banks be inuenced by the fact that you might want to withdraw your funds during the year as opposed to at the end of the year? In answering this question, assume that funds must be left on deposit during the entire compounding period in order for you to receive any interest. Question 3 (a) Set up an amoltization schedule for a $25,000 loan to be repaid in equal installments at the end of each of the next 5 years. The interest rate is 10%. (b) How large must each annual payment be if the loan is for $50,000? Assume that the interest rate remains at 10% and the loan is paid off over 5 years. (c) How large must each payment be if the loan is for $50,000, the interest rate is 10%, and the loan is paid off in equal installments at the end of each of the next 10 yeais? This loan is for the same amount as the loan in part b, but the payments are spread out over twice as many periods. Why are these payments not half as large as the payments on the loan in part b