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Tim Smith is shopping for a used car. He has found one priced at $4,500. The dealer has told Tim that if he can come up with a down payment of $500, the dealer will finance the balance of the price at a 12% annual rate over 2 years (24 months).
1. Assuming that Tim accepts the dealer's offer, what will his monthly (end-of-month) payment amount be?
2. Use a financial calculator to help you figure out what Tim's monthly payment would be if the dealer were willing to finance the balance of the car price at a 9% annual rate.
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