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This is only one question but it has multiple parts. Please answer all parts and use the correct formulas and not Excel. Do NOT use

This is only one question but it has multiple parts. Please answer all parts and use the correct formulas and not Excel. Do NOT use Excel to solve the problems and show your work for each part.

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DW 2 - Page 7 of 10 NovemULI DU 4. (20 points) Assume that today you borrow $450 8% compounded annually. Two years fro time with an interest rate of 6% compounded $450. For all loans, you can assume that the pay loans are made at the end of the year. The figure below: orrow $450 from a bank with an interest rate of w, you borrow an additional $150, this compounded monthly. Four years from now, you borrow that the payment periods are annual and that the r. The complete payment structure is shown in the .08 = .025 12 8% compounded annually 6% compounded * monthly .06 106.005 12 $150 $450 $450 (a) (10 points) Do you need to use the effective interest rate formula to solve this problem? Why or why not? -9 , we cannot use the effective interest rate formula to solve this problem because we will not have only one effective interest since the amount we take is compounded annually for a period of time and then it is compounded monthly.' wrong ( (b) (10 points) Calculate the final balance at the end of year-4. 1st F=P(HT)" = 450 (1+. 906)=452.7 +150 ( 2nd F=600 (1.005)3 = $606.01s (-3pty Final Balace - $452.7+$606.015+$450 = $1508.715 -2

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