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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 3 months ago
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