Amortization schedule with periodic payments: Amortization schedule with periodi

Question

Amortization schedule with periodic payments:

Amortization schedule with periodic payments. Moulton Motors is advertising the following deal on a new Honda Civic: "Monthly payments of $434.85 for the next 60 months and this beauty can be yours!" The sticker price of the car is $20,000. If you bought the car, what interest rate would you be paying in both APR and EAR terms? If you bought the car, what monthly interest rate would you be paying? % (Round to four decimal places.) If you bought the car, what annual percentage rate (APR) would you be paying? % (Round to two decimal places.) If you bought the car, what effective annual rate (EAR) would you be paying? % (Round to two decimal places.)

Explanation / Answer

If you bought the car, what monthly interest rate would you be paying Using the rate function in excel, we can calculate the monthly interest rate 0.9167% RATE(60,434.85,-20000) Monthly Interest Rate is 0.9167% If you bought the car what annual percentage rate would you be paying APR = (0.9167%*12) 11% If you bought the car, what effective annual rate would you be paying EAR = (1.009167^12) - 1 11.57%

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