Question

What is the effective annual interest rate (EAR) of 7-year car loan for $10,000 that has monthly (end of the month) payments of $361.33?  

1)

19.56%

2)

3.25%

3)

3.00%

4)

42.58%

5)

1.50%

6)

34.80%

7)

49.19%

8)

50.76%

9)

46.78%

Answer 1

Calculator
Inputs:
PV	10,000.00
PMT	(361.33)
FV	-
N	84
Output:
I/Y = IRR=	3.3945%
EAR	49.27%
	=(1+3.3945%)^12-1

Answer is 49.19%