Skip Towne goes into Frank's Friendly Furniture Sales and purchases a living room set and bedroom suite for $1,950 total. Skip has to make payments of $100 per month for 36 months. What EAR is Skip paying to buy his furniture?
e. None of the above
EAR stands for effective annual rate. The EAR is usually different from the stated interest rate on a loan because the EAR takes into account the intra-year compounding of interest payments.
Answer and Explanation:
Since the loan features monthly payments, we have to find the monthly interest rate first.
- PMT = monthly payment,
- n = number of months,
- r =...
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from Business 110: Business MathChapter 7 / Lesson 6