A used car dealer advertises financing at 0% interest over 3 years with monthly payments. You must pay a processing fee of $500 at signing. The car you like costs $9000. Please show all work with detail (dont copy other solutions on here as the answers are incorrect)
a) What is your effective annual interest rate? (answer should be 3.83%)
b) You believe that the dealer would accept $8200 if you paid cash. What effective annual interest rate would you be paying, if you financed with the dealer?(answer should be 10.97%)