You want to fully finance a car purchase with a weekly annuity

Finance Aug 05, 2020

You want to fully finance a car purchase with a weekly annuity. The car costs $23,000. The weekly payments will be $98 for 7 years. What is the EAR for this loan?

Expert Solution

PV of cost of car =23000
Weekly Payment =98
Number of Periods =7*52 =364
Rate by using financial calculator
N=364;PMT=98;PV=-23000;CPT I/Y =0.26126%

Weekly rate =0.26126%
EAR of Loan =(1+Weekly Rate)^n-1 =(1+0.26126%)^52-1 =14.53%

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