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# Suppose Anne borrows $500 at an interest rate of 7% which she will pay off in 5 years. Answer the following questions.

2. Suppose Anne borrows $500 at an interest rate of 7% which she will pay off in 5 years. Answer the following questions.(a) how much will she owe at the end of the 5 years, assuming the interest is compounded?(b) If Anne is planning to invest her loan in an asset that she hopes to turn a profit on, what is the minimum rate of return she needs to earn?(c) Suppose Anne is able to pay off her loan in 3 years. What is the size of the repayment she will owe? What rate of return will she have to earn now to at least break even?