Q1 You are looking to buy a car and you have been offered a

Q1:

You are looking to buy a car and you have been offered a loan with an APR of 5.5%?,

compounded monthly.

a. What is the true monthly rate of? interest?

The monthly rate of interest is ???%. (Round to four decimal? places.)

b. What is the? EAR?

The EAR is ???%. (Round to four decimal? places.)

a. monthly rate of interest = 5.5%/12

monthly rate of interest = 0.4583%

b. EAR = (1 + 5.5%/12)^12 - 1

EAR = 5.6408%