A $34,192 car can be purchased in two ways:

Option 1: 48 monthly payments of $803. Payment at the end of each month.

Option 2: 48 monthly lease payments of $399 plus a residual amount of $22,500. The lease payments are at the beginning of each month and the residual amount is at the end of 4 years.

For parts (a) and (b) I recommend using the MS-Excel function =IRR(), or you could use a financial calculator.

a) Calculate the annual nominal rate of interest compounded monthly for option 1. Answer as a percent to 2 decimal places.

b) Calculate the annual nominal rate of interest compounded monthly for option 2. Answer as a percent to 2 decimal places.

c) What residual amount for option 2 would make the rates equal? Answer to the nearest cent.