Question 22.67

37. (Requires a spreadsheet) Ads for purchasing cars often cite the monthly payment per $1000 borrowed. For example, a recent ad quoted $17.48 per $1000 borrowed for a 60-month loan.

  1. What is the corresponding APR? (Hint: Use the RATE function in your spreadsheet.)
  2. What is the corresponding EAR?

37.

(a) 1.89% (The rate is actually 1.9%, with the $17.48 being rounded down from $17.484.)

(b) 1.91%