Charlie changed car insurance companies and received an insurance policy covering two vehicles for 6 months for a premium of $650 plus $32.50 sales tax (total $682.50). The new policy takes effect on December 1. Charlie was given three options in which to pay this amount. The first option was to simply pay the $682.50 on December 1. The other two options consisted of paying the premium in instalments as follows: a) Option 2 allows Charlie to pay the premium over the next 6 months. The insurance company levels a financing charge of 3% on the premium (not including the tax). The total premium ( premium plus sales tax plus 3% financing charge)is then divided by 6 to get the monthly payment. However, the company requires the first two months’ payments up front (i.e., on December 1), with the four remaining payments made at the start of each of the next four months (Jan. 1, Feb. 1, Mar. 1, Apr. 1). The insurance company claims it is charging Charlie an annual rate of interest of only 3% (better than you could get at a bank!). However, what is the actual effective rate being charged? b) Charlie is buying the insurance through a broker and the broker provides a third option, which he claims avoids the 3% financing charge. For a $15 service fee, Charlie can pay the premium in 3 equal monthly instalments, with the first payment paid on December 1. The monthly payment would be premium $650 plus tax plus $15 service fee all divided by 3. Is this really a better deal? To determine, calculate the actual effective rate being charged.