Question
Honest Joes Used RVs offers the following payment options for a used 2015 Freedom 314SO: 1. $49,900 in cash today; 2. $20,000 down payment right
Honest Joe’s Used RVs offers the following payment options for a used 2015 Freedom 314SO:
1. $49,900 in cash today;
2. $20,000 down payment right now and then $1,200 monthly for the next three years (i.e., 36 payments of $1,200 with the first payment due one month from today).
What effective monthly interest rate is he charging in the second payment option? Note: You can use the IRR function or Goal Seek (or Solver) in Excel to solve this problem.
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Modern Principles of Economics
Authors: Tyler Cowen, Alex Tabarrok
3rd edition
1429278390, 978-1429278416, 1429278412, 978-1429278393
