Question

Assume you take out a car loan of $7,900 that calls for 60 monthly payments of $230 each.

a. What is the APR of the loan? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Use a financial calculator or Excel.)

*what is Effective interest rate??

b. What is the effective annual interest rate on the loan? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

*what is Effective annual rate

Answer 1

number of a payment periods NPER 60 $230 payments pmt = pv initial amount $7,900 2.05% Periodic rate Rate RATE(60,-230,7900,) rate(nper,pmt,-pv,) 24.59% annual interest rate APR = [2.05% x 12] Effective annual interest rate (1+r/n)^n-1 n number of compo ngs 27.57% |(1+(0.2459/12))^12-1