Problem:
Suppose you plan to borrow $10000 from the bank and have two options to pay back:
a) $500 monthly payment for 24 months and the first payment due one month from you take the loan.
b) $6050 yearly payment for 2 years and the first payment due one year from you take the loan.
Required:
Question 1: What is EAR implied in each option? Which one do you prefer and explain why? Please provide step by step solution.