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Ernest borrows $7300 at 9%/a compounded monthly to purchase new kitchen appliances. He will pay...

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Accounting

Ernest borrows $7300 at 9%/a compounded monthly to purchase new kitchen appliances. He will pay $225 per month until the loan is paid off. a) If the interest rate increases by 0.4%/a at the end of every year, how long will it take Ernest to pay off the loan? b) How much interest will he pay? c) Ernest negotiated a cap for the interest rate. It cannot go higher than 10%/a. How much money will that save him? d) Explain how you solved this problem.

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