Raj Krishnan bought a Honda Civic for $17,345. He put down $6,000 and financed the rest through the dealer at an APR of 7.95 percent for four years. What is the effective annual interest rate (EAR) if the loan payments are made monthly? (Round answer to 0 decimal places, e.g. 15%.) Effective Annual interest rate %
Effective annual rate = [(1+Interest rate for period)^n]-1
Interest rate annual = 7.95% = 0.0795
N = number of periods in a year = 12[months]
Interest rate for period = Interest rate annual/n =0.0795/12 = 0.006625
Effective annual rate =[(1+0.006625)^12]-1 = 1.08246-1 = 0.08246 = 8.25%
Effective annual rate =8.25%
Raj Krishnan bought a Honda Civic for $17,345. He put down $6,000 and financed the rest...
6.16 Effective annual rate: Raj Krishnan bought a Honda Civic for $17,345. He put down $6,000 and financed the rest through the dealer at an APR of 4.9 percent for four years. What is the effective annual rate (EAR) if the loan payments are made monthly? 6.23. Growing annuity: Modern Energy Company owns several gas stations. Management is looking to open a new station in the western suburbs of Baltimore. One possibility that managers at the company are evaluating is...
Amortization schedule with periodic payments. Moulton Motors is advertising the following deal on a new Honda Civic: "Monthly payments of $400.40 for the next 60 months and this beauty can be yours!" The sticker price of the car is $18,000. If you bought the car, what interest rate would you be paying in both APR and EAR terms? What is the amortization schedule of the first six payments? If you bought the car, what monthly interest rate would you be...
Barb bought a house with 20% down and the rest financed by a 30-year mortgage with monthly payments calculated at a nominal annual rate of interest 8.4% compounded monthly. She notices that one-third of the way through the mortgage she will still owe 200,000. Determine the purchase price of the house. 252,706 262,706 272,806 282,706 292,706
Pete Frank bought a computer for $4,000. Pete put down $500 and financed the balance at 10 ½% for 36 months. What is his monthly payment? (Use loan amortization table.)
Ricardo purchase a used car for $10,000 He wrote a check for $2,000 as a down payment for the car and financed the $23,681 balance. The annual percentage rate (APR) is 9% compounded monthly, and the loan is to be repaid in equal monthly installments over the next four years. How much is Ricardo's monthly car payment?
12) Kiran bought a car for $17,200. He financed the vehicle with a 36-month auto loan through the dealership, at an interest rate of 3% APR. a) What will be his monthly payments on the loan? b) What is the total amount he would have paid for the car at the end of the 36 months? 13) An investment offers the following year-end cash flows: End of year Cash Flow $20,000 $30,000 $15,000 What is the present value of...
You just bought a fancy TV on credit for $5,000 and the terms of the loan are: 7-year loan for with monthly (end of the month) payments of $196.30 What is the Effective Annual interest Rate (EAR) of this loan?
John Lee bought a home in Des Moines, Iowa, for $135,000. He put down 15% and obtained a mortgage for 30 years at 8 1/2%. What is (A) John's monthly payment and (B) the total interest cost of the loan?
Tian buys a car that costs $35,000. a) He pays $5,000 down (i.e. immediately), and he pays off the rest of the loan with 26 bi-weekly payments per year of $250 for 5 years. What is the effective annual interest rate i? b) Instead, he pays no money down but increases his monthly payments to $290, except for the last one which is exactly enough to pay off the loan. The interest rate is the same as in part a)....