Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Solve Problem 20.22 using Excel.

You need to borrow $12,000 to buy a car,
so you visit two banks and are given two
alternatives. The first bank allows you to pay
$2595.78 at the end of each year for six years.
The first payment is to be made at the end of
the first year. The second bank offers equal
monthly loan payments of $198.87, starting
at the end of first month. What are the
interest rates that the banks are charging?
Which alternative is more attractive?
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Transcribed Image Text:You need to borrow $12,000 to buy a car, so you visit two banks and are given two alternatives. The first bank allows you to pay $2595.78 at the end of each year for six years. The first payment is to be made at the end of the first year. The second bank offers equal monthly loan payments of $198.87, starting at the end of first month. What are the interest rates that the banks are charging? Which alternative is more attractive?
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