Your best friend consults you for investment advice. You learn that his tax rate is 38%, and he has the following current investments and debts:

A car loan with an outstanding balance of $5,000 and a 4.81% APR (monthly compounding)

Credit cards with an outstanding balance of $10,000 and a 14.85% APR (monthly compounding)

A regular savings account with a $30,000 balance, paying a 5.54% effective annual rate (EAR)

A money market savings account with a $100,000 balance, paying a 5.18% APR (daily compounding)

A tax-deductible home equity loan with an outstanding balance of $25,000 and a 4.94% APR (monthly compounding)

a. Which savings account pays a higher after-tax interest rate?

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