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Question - You're given with a 6-year auto loan from your credit union. Suppose the car costs $56,000 and your down payment is $6,500. The current market interest rate is 3.2% for the short-term loans with the same creditability as yours. Answer the following questions:

Given that the APR (namely the Annual Percentage Rate. That is, the stated interest agreed on the loan) of the loan is 3.2% per year, what is the monthly payment if you're intended to have the loan for 6 years?

Suppose that the left-over principal of the loan is $36,000 at the end of the second year after two years of payments given in a), what is the Internal Rate of Return (IRR) for this loan now? Is this rate different from the 3.2% market interest rate? Why or why not?

Reference no: EM133132623

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