contestada

Effective annual rate: Raj Krishnan bought a Honda Civic for $17,345. He put down $6,000 and financed the rest through the dealer at an APR of 4.9 percent for four years. What is the effective annual rate (EAR) if the loan payments are made monthly

Respuesta :

segehood

Answer:

EAR = 5.01%

Explanation:

Given that

APR = 4.9% = 0.049

Loan amount = initial amount - deposited amount

= 17345 - 6000

= 11,345

PV = 11345

Frequency of compounding, m = 12

Recall that

EAR = (1 + r/m)^n - 1

Thus,

= (1 + 0.049/12)^12 - 1

= 1+ 0.049/12^12 - 1

= 1.0501 - 1

= 0.0501 ×100

= 5.01%

The effective annual rate is 5.01%.

  • The calculation is as follows:

= 5.01%

Therefore we can conclude that The effective annual rate is 5.01%.

Learn more: brainly.com/question/17429689

Otras preguntas