Mr. Jefferson had a new heating system installed in his office. The balance owing to the heating company is $22,000 which includes equipment and installation fees. The heating company has agreed to...

Mr. Jefferson had a new heating system installed in his office. The balance owing to the heating company is $22,000 which includes equipment and installation fees. The heating company has agreed to let him make individual payments on the account whenever he’d like, but the final balance must be paid two years (24 months) from now. Starting today, interest will accumulate on the balance at 3.08% compounded monthly. Mr. Jefferson will make a payment of $7000 5 months from now and $7000 15 months from now.

What is the value of i (the periodic interest rate)?

a.

1.540000

b.

0.007700

c.

0.001283

d.

0.002567