An auto dealership is advertising that a new car with a sticker price of $19,140

Question

An auto dealership is advertising that a new car with a sticker price of $19,140 is on sale for $16,999 if you pay in cash, or you get a finance for 60 months with a monthly payment of $319. Note that 60 payments × $319 per payment = $19,140, which is the sticker price of the car. By allowing you to pay in a series of payment (starting one month from now) instead of $16,999 in cash, the dealer effectively makes the loan of $16,999 to you.

If you choose the financing option, what is the interest rate that the dealership charges on your loan?

Please answer as Excel spreadsheet with steps!

Explanation / Answer

PV = 16,999, FV = 0, PMT = -319, N = 60

use rate function in Excel and multiply by 12

interest rate = 4.7695%

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.