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 1:48 monthly payments of $981.22

Bank 2:72 monthly payments of $716.07

Bank 3:156 weekly payments of $288.61(Assume a 52-week year.)

Bank 4:20 quarterly payments of $2,475.88

Which loan should Michael take?Hint:Which loan has the lowest EAR?