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3. Mr. Smith has arranged for a mortgage loan of $200,000. The annual rate on the loan is 12%. The bank requires Mr. Smith to make payments of $4,212.90 at the end of every month. How many payments will Mr. Smith have to make?

4. You have decided to buy a car, the price of the car is $18,000. The car dealer presents you with two choices:

(A) Purchase the car for cash and receive $2000 instant cash rebate - your out of pocket expense is $16,000 today.

(B) Purchase the car for $18,000 with zero percent interest 36-month loan with monthly payments.

Market interest rate is 4%. Which option above is cheaper? How much do you save?