You wish to buy a used car priced at $27,000. The car dealer's offer is for you to pay $825 at the beginning of each month for the next three years. At the same time, a bank offers you a loan of $27,000 which is to be settled in five years with month-end payments of $525. By calculating the effective interest rate of both options, determine the option that is more economical.

AppendixLO1