You want to buy a new sports coupe for $74,900, and the finance office at the dealership has quoted you a loan with an APR of 7.3 percent for 36 months to buy the car. What will your monthly payments be? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Monthly payment $ What is the effective annual rate on this loan? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Effective annual rate %

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Priatouri Priatouri · Answer 1 · 2020-09-21T01:53:15+02:00

Answer:

Annuity payment = $2322.97

Effective annual interest rate = 7.55%

Explanation:

The price of sports coupe (present value ) = $74900

Interest rate = 7.3 % per annum

Monthly interest rate = 7.3 / 12 = 0.6083%

Number of months = 36

Now find the monthly payment.

Present value = annuity amount ×[(1-(1+r)^-n) / r]

74900 = annuity amount × [(1-(1+ 0.6083%)^-36) / 0.6083%]

Annuity payment = $2322.97

Effective annual interest rate = (1+ APR/number of period)^n -1

Effective annual interest rate =(1+ 7.3%/12)^12 – 1

Effective annual interest rate = 7.55%