Question

Problem 4.L04.10 (similar to) Question de In the past, a car manufacturer advertised 0% financing on many of its models. For example, a particular model had a cash price of $11.980.46. However, if you elected to buy the car under the 0% financing deal, then the manufacturer used a price of $13,824. If you chose a 48-month term, then the manufacturer calculated your monthly loan payments using the 0% financing price instead of the cash price ($288 per month). In the fine print, the manufacturer was legally obliged to disclose the effective annual rate that it charged for the loan. What rate did the manufacturer disclose? % The disclosed effective annual rate was (Round to two decimal places as needed.) Enter your answer in the answer box and then click Check Answer

Answer 1

Function Arguments ? x RATE Pmt Nper -288 Py 11980.46 Evo Type o 1 1 1 = 48 = -288 = 11980.46 = 0.006 Returns the interest rate per period of a loan or an investment. For example, use 6%/4 for quarterly payments at 6% APR. Type is a logical value: payment at the beginning of the period = 1; payment at the end of the period = 0 or omitted. Formula result = 0.60% Help on this function D OK Cancel

Hence, Disclosed effective annual rate was 7.44% [(1+0.6%)^12-1]

*Please rate thumbs up