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Challenge question I.Michael is shopping for a special automobile. He finds the exact car he wants,...
Challenge question
I.Michael is shopping for a special automobile. He finds the exact car he wants, a 1966 dark blue Pontiac GTO. This car is currently the property of a neighbor, so to buy it for the agreed-upon price of 45,000, Michael must secure his own financing. He visits four different financial institutions and gets the following available loans:
Bank 1: 3636 monthly payments of $1,399.78
Bank 2: 6060 monthly payments of $891.05
Bank 3: 312312 weekly payments of $177.97 (Assume a 52-week year.)
Bank 4: 1616 quarterly payments of $3,297.87
Which loan should Michael take? Hint: Which loan has the lowest EAR?
If Michael selects Bank 1 for the loan, what is the periodic interest rate on the loan?
. 6250%
If Michael selects Bank 1 for the loan, what is the EAR on the loan?
(Round to two decimal places.)
Solutions
Expert Solution
SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE
As nothing was mentioned excel is used.
jeff jeffy answered 1 month agoRelated Solutions
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special automobile. He finds the exact car he wants, a 1966 dark
blue Pontiac GTO. This car is currently the property of a
neighbor, so to buy it for the agreed-upon price of $40,000,
Michael must secure his own financing. He visits four different
financial institutions and gets the following available loans:
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Bank 2: 72 monthly payments of $667.65
Bank 3: 208 weekly payments of...
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