Your best friend consults you for investment advice. You learn that his tax rate is 20%, and he has the following current investments and debts:

a. A car loan with an outstanding balance of $5 000 and a 6% APR (monthly compounding)

b. Credit card with an outstanding balance of $10 000 and a 12% APR (semiannually compounding)

c. A saving account with $200 000 balance, paying a 5.5% EAR

d. A tax-deductible home equity loan with an outstanding balance of $25000 and a 4.8% APR (quarterly compounding)

Should your friend use his savings to pay off any of his outstanding debts? Explain.

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