Response to the following questions:
1. Rent is typically paid at the first of each month. What pattern of cash flows, an ordinary annuity or an annuity due, does a rental agreement follow?
2. a. Under what conditions does the effective annual rate of interest (EAR) differ from the annual percentage rate (APR)?
b. As the frequency of compounding increases within the annual period, what happens to the relation between the EAR and the APR?