Because of the peso devaluation, a car costing P150,000 is to be purchased through a find company instead of paying cash. If the buyer is required to pay P40,000 as downpayment P4,000 each month for four years, what is the effective interest rate on the diminishing balance?

Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter17: Capital And Time
Section: Chapter Questions
Problem 17.7P
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6. Because of the peso devaluation, a car costing P150,000 is to be purchased through a finance
company instead of paying cash. If the buyer is required to pay P40,000 as downpayment and
P4,000 each month for four years, what is the effective interest rate on the diminishing
balance?
Transcribed Image Text:6. Because of the peso devaluation, a car costing P150,000 is to be purchased through a finance company instead of paying cash. If the buyer is required to pay P40,000 as downpayment and P4,000 each month for four years, what is the effective interest rate on the diminishing balance?
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