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Accounting for Decision Making and Control 7th Edition by Jerold Zimmerman
Edition 7ISBN: 978-0078136726Accounting for Decision Making and Control 7th Edition by Jerold Zimmerman
Edition 7ISBN: 978-0078136726 Exercise 32
New Car
You are considering buying a $50,000 car. The dealer has offered you a 13.6 percent loan with 30 equal monthly payments. On questioning him, you find that the interest charge of $17,000 (or 0.136 × $50,000 × 2.5 years) is added to the $50,000 for a total amount of $67,000. The payments are $2,233.33 a month ($67,000÷30). What is the approximate effective annual interest rate?
You are considering buying a $50,000 car. The dealer has offered you a 13.6 percent loan with 30 equal monthly payments. On questioning him, you find that the interest charge of $17,000 (or 0.136 × $50,000 × 2.5 years) is added to the $50,000 for a total amount of $67,000. The payments are $2,233.33 a month ($67,000÷30). What is the approximate effective annual interest rate?
Explanation
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Effective annual interest rate:
The eff...
Accounting for Decision Making and Control 7th Edition by Jerold Zimmerman
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