Question
In: Finance
Challenge question I. Michael is shopping for a special automobile. He finds the exact car he...
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: 36 monthly payments of $1, 399.78
Bank 2: 60 monthly payments of $891.05
Bank 3: 312 weekly payments of $177.97(Assume a 52-week year.)
Bank 4: 16 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?
Solutions
Expert Solution
SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE
| ANSWER | GO FOR BANK 2 : IT HAS LOWEST EAR =7.23% | ||||||
| ANSWER | PERIODIC INTEREST RATE FOR BANK 1 = | 0.625001% | [ROUNDED TILL 6 DECIMALS] | ||||
jeff jeffy answered 3 months agoRelated Solutions
Challenge question I. Michael is shopping for a special automobile. He finds the exact car he...
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 $40,000,
Michael must secure his own financing. He visits four different
financial institutions and gets the following available loans:
Bank 1: 60 monthly payments of $782.65
Bank 2: 72 monthly payments of $667.65
Bank 3: 208 weekly payments of...
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 ...
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