Answered: Aragon credit Union offers to lend…

Aragon credit Union offers to lend Cassidy $35,000 to buy a car; the loan calls for payments of $855.99 per month for 4 years. Which of the following statement is most CORRECT?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 14P

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Concept explainers

Calculating the Return On A Loan

Question

Aragon credit Union offers to lend Cassidy $35,000 to buy a car; the loan calls for payments of $855.99 per month for 4 years. Which of the following statement is most CORRECT? (Use 6 decimal places)

a. The effective annual rate of interest is 8.401 percent

b. The monthly rate of interest is .7050 percent.

c. The nominal annual rate of interest is 6.7446 percent.

d. The monthly annual rate of interest is .7000

e. The effective annual rate of interest is 8.094

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