Recently, you purchased an apartment and now need to take up a home renovation loan. OXBX Bank charges an interest of 5.8% per year, compounded daily. Whereas Jaybank charges 5.88% per year, compounded monthly.

You are also considering buying a motor car and the terms of the loan offered by SBS Bank is summarized as follows:

Loan amount = $35,000

Tenure = 5 years

Interest = 3% per year

Installment = Equal amount at the end of each month

Required:

(a) Analyse which bank you should choose for the home renovation loan.

(b) Calculate the amount to be paid for each installment as well as interest for month 8 and 25. Describe and explain the observations you are able to make.