you are interested in purchasing a new Chevrolet camaro for $30000. you are plan

Question

you are interested in purchasing a new Chevrolet camaro for $30000. you are planning to finance the entire amountby getting a loan that you will pay it monthly over the next five years. the interest rate is 12% per year compounded monthly. determine the effective interest rate per month and the monthly payment.

the following data is available for three different alternatives. using present worth analysis, find the best alternative
data.             alternative
                             x.             y.         z
initial cost        $2,500. $2,000.    $3,000
benefits/year. $700.     $300.       $600
life,years.        infinity.    10.            5
i.                           12%

Explanation / Answer

1. Time = 5 * 12 = 60 months
rare = 12%/12 = 1%
EAR = (1+1%)12-1 = 12.68%

Only 1 question can be solved at a time.

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