Assignment 3 - Assignment#3 1 The APR = 30 12 = 360 The EAR...

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Assignment #3 1. The APR = 30% × 12 = 360% The EAR = (1 + 360%/12)^12 -1 = 22.29808 = 2229.81% 2. To choose which option is better deal, we need to find the PV for the monthly payments of each options. a). FV = 0 , PMT = – (65200 – 2000 – 4700)/(4×12) × (1 + 6.1%/12) = – 1224.9453 , I/Y = 8 , N = 48 , P/Y = 12, C/Y = 1, CPT PV = 58006.8258 b). FV = 0 , PMT = – (65200 – 4700)/(4×12) ×(1+1.2%/12) = – 1261.6771 I/Y = 8 , N = 48 , P/Y = 12, C/Y = 1, CPT PV = 51959.1542 The present value of total monthly payments for b) is less than a), so option b)
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