You want to buy a new sports coupe for $80,500, and the finance office at the de
ID: 2384092 • Letter: Y
Question
You want to buy a new sports coupe for $80,500, and the finance office at the dealership has quoted you an APR of 6.2 percent for a 48 month loan to buy the car.
What will your monthly payments be? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
What is the effective annual rate on this loan? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
You want to buy a new sports coupe for $80,500, and the finance office at the dealership has quoted you an APR of 6.2 percent for a 48 month loan to buy the car.
Explanation / Answer
1. Monthly Payment is just annuity value for PV of $80500 @ 6.2% p.a. for 48 months.
Its $1,897.94 per month for 48 months assmuing no Down Payment & payment is made at end of each month.
2. Annual effective rate is 6.38% i.e. {1 + (0.062/12)}12
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