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Challenge question I. Michael is shopping for a special automobile. He finds the exact car he wants, a 1 9 6 6 dark blue Pontiac
Challenge question I. Michael is shopping for a special automobile. He finds the exact car he wants, a dark blue Pontiac GTO. This car is
currently the property of a neighbor, so to buy it for the agreedupon price of $ Michael must secure his own financing. He visits four different
financial institutions and gets the following available loans:
Bank : monthly payments of $
Bank : monthly payments of $
Bank : weekly payments of $Assume a week year.
Bank : quarterly payments of $
Which loan should Michael take? Hint: Which loan has the lowest EAR?
If Michael selects Bank for the loan, what is the periodic interest rate on the loan?
Round to four decimal places.
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