Question

4. The two parts of this question are independent of each other. (a) A car is purchased for $8,995 down now plus bi-weekly payments of $276 for four years. Interest is 5.2% APR compounding bi-weekly and all payments are made at the beginning of each bi-weekly compounding period. Calculate the "cash price of the car rounded up to the nearest dollar. [7 points) ("Cash price” = full price now, "bi-weekly” = every other week, 1 year = 52 weeks) (b) One of your MATA32F professors claims that an investment at 7.3% APR can yield a 25% return on that investment at the end of three years. Do you believe them? Justify your answer with an appropriate calculation. (5 points)