What is the nominal annual rate

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Reference no: EM13976444

You want to expand your garage. A contractor, who was highly recommended, says that he will do the whole job (new roof, automatic garage door, insulation and more) for $55,000. He offers you two choices:

1) You can pay the $55,000 cash, now.

2) You can make $11,000 down payment now, and pay $1200 each month for four years.

Questions:

A. At what monthly bank interest rate would the two choices be equivalent?

B. What is the nominal annual rate?

Reference no: EM13976444

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