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A friend borrows 500$, agreeing to pay back the loan principal plus 75$ interest one month later. One year goes by and he doesn’t pay. Exactly one year later you ask him to pay the loan immediately plus an interest with monthly compounding.
A) What is the amount that he has to pay
B) What is the effective annual interest rate that he paid on the 500$ loan.
C) For the quotation for an interest rate is given as 1.2% per month, compounded continuously. What is the effective interest rate per year?
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