(10 pts) Shady Brian\'s Used Cars advertises a low 6% per year financing deal ov
ID: 2784463 • Letter: #
Question
(10 pts) Shady Brian's Used Cars advertises a low 6% per year financing deal over 24 months. Accordingly, Shady Brian offers the following deal on a lemon-yellow convertible ist pricc Less: Down Payment Balance to finance 5999.00 1500.00 4499.00 Add: Credit Investigation 6% of $4499 (269.94 per year) Total Monthly payment (total/24) 75.00 539.88 5113.88 213.08 Alternatively, Brian will sell you the car for $5250 now. Based on what you have learned from Dr. Leipzig, you realize this means that Shady Brian's deal is asking you to finance $5250 minus your down payment. What actual effective annual interest rate is paid on Shady Brian financing deal? For 5 points extra credit calculate the apparent effective annual interest rate that Brian is trying to trick you into considering.Explanation / Answer
As Per Seller
As we Know
EMI= Amount of Loan/PVAF(24 months, r%)
178.125= 3750/PVAF(24Months,r%)
r=1% per month apx i.e 12 %p.a
List Price 5250 Less " Downm Payment 1500 Balance to Refinance 3750 Add: Credit Investigation 75 Add: 6% interest (2years) 450 4275 Monthly Payment' 178.125Related Questions
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