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faltersainse [42]
2 years ago
9

Effective annual rate: Raj Krishnan bought a Honda Civic for $17,345. He put down $6,000 and financed the rest through the deale

r at an APR of 4.9 percent for four years. What is the effective annual rate (EAR) if the loan payments are made monthly
Business
1 answer:
g100num [7]2 years ago
3 0

Answer:

EAR = 5.01%

Explanation:

Given that

APR = 4.9% = 0.049

Loan amount = initial amount - deposited amount

= 17345 - 6000

= 11,345

PV = 11345

Frequency of compounding, m = 12

Recall that

EAR = (1 + r/m)^n - 1

Thus,

= (1 + 0.049/12)^12 - 1

= 1+ 0.049/12^12 - 1

= 1.0501 - 1

= 0.0501 ×100

= 5.01%

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Data concerning Pellegren Corporation's single product appear below: Fixed expenses are $531,000 per month. The company is curre
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a. decrease of $18,000

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<u>Particulars          Current                  Proposed </u>

Sales               $800,000                 $837,000

                     ($200 × 4,000) (200 - 14) × (4,000 + 500)

Variable

expenses          $160,000               $180,000

                     (40 × 4,000)              (40 × (4,000 + 500))

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