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****RESPOND TO ALL QUESTIONS AND THOROUGLY*** 1. You are thinking about buying a piece of art that costs $20,000. The art dealer is proposing the
****RESPOND TO ALL QUESTIONS AND THOROUGLY***
1. You are thinking about buying a piece of art that costs $20,000. The art dealer is proposing the following deal: He will lend you the money, and you will repay the loan by making the same payment every two years for the next 10 years (i.e., a total of 5 payments). If the interest rate is 10% per year, how much will you have to pay every two years? Every two years the payment is 2. You are considering two ways of financing a spring break vacation. You could put it on your credit card, at 18% APR, compounded monthly, or borrow the money from your parents, who want an interest payment of 7% every six months. Which is the lower rate? (Note: Be careful not to round any intermediate steps less than six decimal places.) The effective annul rate for your credit card is The effective annual rate for the loan from your parents is (Round to two decimal places.) The option with the lower effective annual rate is (1) (Select from drop-down menu.) (1) the loan from your parents 3. Your credit card is the rate of return of this opportunity? 4. You are looking to buy a car and you have been offered a loan with an APR of 6.3%, compounded monthly. a. What is the true monthly rate of interest? b. What is the EAR? (Note: Be careful not to round any intemediate steps less than six decimal places.) a. What is the true monthly rate of interest? The monthly rate of interest is \%. (Round to four decimal places) b. What is the EAR? The EAR is \%. (Round to four decimal places.) 5. You make monthly payments on your car loan. It has a quoted APR of 5.9% (monthly compounding). What percentage of the outstanding principal do you pay in interest each month? (Note: Be careful not to round any intermediate steps less than six decimal places) https:/fxlitemprod.pearsoncmg.com/apiN1print/highered 1/2
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