Show all keystrokes or formula

20. Jakes Used Cars just sold you a clunker (you need it to get to class on time). You financed the $36,000 purchase price for 48 months. They said your payment would be $890. What interest rate did they charge you (assume monthly compounding)?

21. Geegee checks Daniels credit rating and determines that he will qualify for a 7.8% auto loan, and they agree that his trade-in is worth $7,500. The cost of the car is $37,900. If he is planning to finance the loan for 4 years, how much does he have to pay every month?

22. Your grandfather has offered you a choice of one of the three following alternatives: $10,788.42 now; $280 a month for the next seven years; or $20,000 at the end of seven years. Assuming you could earn 9 percent annually, which alternative should you choose?

(Hint: 1. compare three options based on the same dollar value. 2. This calculation is similar to the lottery problems that we covered).

Option 1:

Option 2:

Option 3:

Which alternative would you choose?