Investment Decision.Judy has just received $16,450.00 as an inheritance from her uncle and is considering ways to use the money. Judy's car is one year old, and her monthly payment is $392. She owes 48 more payments. The amount to pay off the loan is $16,360. Judy will save $2,546 in interest if she pays off her car loan now. Judy is also considering investing the in a16,450.00 certificate of deposit (CD). She is guaranteed a return of 3% on a four-year CD.

How much would Judy earn from the CD?

Which of the two alternatives offers the better return? (Note: Ignore any tax effect.) (Hint: you need to compute the interest rate on Judy's loan.)