Fast Eddie's Used Cars will sell you a 2000 Ford Taurus for $3,000 with no money down. You agree to make weekly payments of $40 for two years, beginning one week after you buy the car. What is the EAR of this loan?

Question

Quizplus · Accepted Answer

The EAR (Effective Annual Rate) can be calculated using the formula for the EAR of a loan with weekly payments. Given the loan amount ($3,000), weekly payments ($40), and the loan term (2 years or 104 weeks), we can calculate the interest rate per period and then annualize it to find the EAR. The correct calculation leads to an EAR of approximately 40.94%.

Fast Eddie's Used Cars Will Sell You a 2000 Ford